Wall Street approaches record, but beneath the surface a worrying data point not seen since 1999 emerges

The S&P 500 index approached a new record, but at the same time an unusual data point emerged: the number of stocks hitting 52-week lows exceeded the number hitting new highs. This combination hasn't been seen since December 1999, months before the dot-com bubble burst. Analysts point to the concentration of gains in a few sectors and geopolitical risks.

In the last trading day on Wall Street, major indices saw sharp gains, led by stocks related to the AI industry. The Nasdaq rose 2% to a new record, and the S&P 500 strengthened by 1.5% to 7,764.70 points, less than 1% from a new high. However, beneath the surface lurked a worrying data point: during trading, the number of S&P 500 stocks hitting new 52-week lows (30 stocks) exceeded those hitting new 52-week highs (only 7 stocks). Jason Goepfert, founder of SentimenTrader, noted that the last time these three conditions occurred together—a gain of at least 1% in the index, less than 1% from a high, and more new lows than new highs—was on December 21, 1999, just months before the dot-com bubble peak. The only other previous instance in history was on July 23, 1929. Art Hogan, chief market strategist at B. Riley Wealth, explained that the gap stems from the concentration of gains in a few sectors: communication services, information technology, and consumer cyclical. While the technology sector is near its peak, the consumer cyclical sector is 7% below its peak and communication services 4% below. Hogan warned that continued tensions in the Middle East, high energy prices, and Fed rate hikes could prevent the market from setting new highs in the coming months.