While the S&P 500 remains within 0.2% of its record high after closing above 7,800 for the first time on October 6, a severe internal divergence has left 41% of the index's constituent stocks trading more than 30% below their all-time peak.
Mega-Cap Concentration Hides Widespread Sector Weakness
According to data published by The Kobeissi Letter on October 11, 2026, 84% of S&P 500 stocks are down at least 10% from their all-time highs, while 17% have plummeted over 50%. Because the benchmark weights companies by market capitalization, mega-cap technology names dominate its overall movement—with Nvidia, Apple, and Microsoft alone accounting for roughly one-fifth of the entire index.
Rate-sensitive sectors have experienced the deepest drawdowns after longer-dated Treasury yields hit 24-year highs on October 7. Drawdowns across major industry groups include:
- Real Estate: 97% of stocks down at least 10% (hitting a record low relative to the S&P 500)
- Materials: 96% of stocks down at least 10%
- Utilities: 94% of stocks down at least 10%
- Consumer Discretionary: 92% of stocks down at least 10%
- Information Technology: 72% of stocks down at least 10%
- Healthcare: 70% of stocks down at least 10%
- Energy: 62% of stocks down at least 10%
The Artificial Intelligence Rally Divide
Kevin Gordon, head of macro research and strategy at Schwab, noted that artificial intelligence equities are primarily keeping the index elevated. He pointed out that the average S&P 500 constituent has dropped 14% peak-to-trough since early August.
The divergence between AI leaders and the rest of the market is highlighted by Goldman Sachs data. The firm's ex-AI index—which excludes stocks classed as AI enablers—gained 6.7% in the six months leading to October 6, compared to an 18.3% gain for the full S&P 500. Amid ongoing market discussion surrounding AI capital expenditure bubbles, Gordon warned that a capex shortfall or missed earnings from top AI spenders could destabilize corporate earnings across the benchmark.
Why It Matters
This extreme level of market concentration leaves broad equity indexes vulnerable to sharp corrections if top-tier technology earnings soften. With nearly half of index members already in deep drawdowns, the wider market lacks a broad base of participation to sustain higher levels. Upcoming third-quarter financial reports from mega-cap tech spenders will indicate whether AI-driven momentum can continue propping up general market performance.
