Nearly half the stocks in the S&P 500 are at cross purposes with the rest of the market
Nearly half of the stocks in the S&P 500 are moving against the index with a negative beta, an unusual divergence that is becoming increasingly difficult to ignore. About 45% of S&P 500 stocks have โฆ
Nearly half of the stocks in the S&P 500 are moving against the index with a negative beta, an unusual divergence that is becoming increasingly difficult to ignore.
About 45% of S&P 500 stocks have a negative three-month beta, according to a recent note from Goldman Sachs. The data closely aligns with CNBC's finding that nearly 40% of S&P 500 stocks had a negative three-month beta versus the index, while 17% have a negative one-year beta, based on weekly returns.
Beta measures how a stock moves relative to the rest of the market. A negative beta means an individual stock's returns moved in the opposite direction of the S&P 500 over the measured period.
The surge in stocks with a negative beta dovetails with other unusual market signals. The S&P rallied 1.5% last Monday. The same day 30 stocks touched a 52-week low while just 7 scored a new high. The last time the S&P 500 gained at least 1% while sitting within 1% of a new 52-week high and new lows outnumbered new highs was in December 1999 , right before the very top of the dot-com boom, according to Jason Goepfert, founder of SentimenTrader.
The two indicators show that market indexes can remain at or close to records despite wide divergences among individual stocks.
The yawning gap largely reflects how concentrated the S&P 500 has become, according to Adam Turnquist, chief technical strategist at LPL Financial.
Mega-cap technology companies carry an outsized weight in the benchmark, meaning a strong performance from a small number of stocks can drive the index even when many others are moving the other way.
"It only takes a few of those mega caps names to work, and a lot of the smaller weighted stocks don't need to work," Turnquist told CNBC, pointing to unusually low correlations among S&P 500 stocks.
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