S&P 500 hits record highs amid extreme divergence, Bank of America warns U.S. stock market may be approaching the end of a bubble

Odaily Planet Daily reports that the S&P 500 index closed at a record high on the last trading day of May, but only a handful of its constituent stocks simultaneously hit new all-time highs, with most concentrated in AI-related sectors, raising concerns about structural imbalance in the market. Analysts pointed out that although the index continues to hit new highs, the rally is driven by a few heavyweight tech stocks, with market divergence approaching historically extreme levels, suggesting potential risks may be accumulating.

Data showed that on Friday, only 20 S&P 500 constituents hit new all-time highs, of which only 7 had no direct correlation with artificial intelligence. Bank of America strategist Michael Hartnett noted that this phenomenon is highly similar to the peak of the internet bubble in 2000, when similarly only about 20 stocks hit new highs.

In his latest report, Hartnett warned that speculative sentiment in the market continues, but against the backdrop of high interest rates and tightening policies by global central banks, a turning point for the market may be approaching. He advised investors to gradually shift towards defensive asset allocation.

The rise in U.S. stocks in May was mainly driven by the semiconductor sector. Micron Technology rose 87.8%, Advanced Micro Devices rose 45.6%, Samsung rose 43%, and SK Hynix rose 81%, pushing the Nasdaq index up 25% in April and May, marking its best two-month performance in over two decades. (Jinshi Data)