What Is Happening
A surprising chunk of the S&P 500 has been moving opposite the benchmark lately. In its latest read, Goldman Sachs put the share with negative three-month beta near 45%. CNBC's own screen lands close by, with almost 40% in negative territory over three months and 17% negative over the past year, based on weekly returns. In plain English, a negative beta means those stocks tended to rise when the index fell, and vice versa, over the measured stretch.
Back in July, Alliance Bernstein, using one-year trailing returns, highlighted a record slice of U.S. stocks showing negative beta as AI leaders pulled the market higher. And earlier this month, Evercore ISI, using a six-month lookback, identified 115 S&P names with negative beta, describing energy's behavior as a "synthetic S&P 500 put option" in response to geopolitical strains.
How the Index Can Climb While Many Stocks Sink
You can see the split in the tape. On a recent Monday the S&P 500 added 1.5%, yet 30 stocks hit 52-week lows while only 7 set new highs. Jason Goepfert of SentimenTrader points out that the previous occurrence of the index rising 1% or more while it was still within 1% of a new 52-week peak, with new lows exceeding new highs, came in December 1999.
What is powering that disconnect? Concentration. "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," observed Adam Turnquist of LPL Financial, where he serves as chief technical strategist, pointing to unusually low correlations across the S&P 500. Putting it plainly, Bradley Krom - WisdomTree's director of investing strategy - said: "Beta is a function of correlation and volatility." Big moves happening in different stocks at different times can cancel out at the index level, making the headline look calmer than the churn underneath.
Why Sectors Are Behaving Differently
AI-linked winners are one big force. Semiconductor makers, hardware providers and other companies tied to AI infrastructure have ridden massive capital spending, while many businesses outside that theme have struggled to keep pace. Kurt Feuerman - AllianceBernstein's chief investment officer for Select U.S. Equity Portfolios - put it this way: "But a narrow market can also distort the signal investors receive from index returns. When a handful of companies dominate performance, many financially sound businesses may lag or even decline, simply because they aren't tied directly to the most powerful market narrative."
Energy is another story line. "Another part of the other story is energy. That's been pronounced this year: higher oil prices, higher energy stocks and then the rest of the market trades lower," Turnquist said, adding that more defensive areas are part of the negative-beta mix too. Evercore ISI's six-month list of negative-beta names was tilted toward energy, utilities and consumer staples.
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What Strategists Expect Next
If leadership widens out, Turnquist thinks the count of negative-beta stocks could shrink. Still, he expects elevated dispersion to stick around as investors remain selective about companies positioned to benefit from AI spending. Krom sees today's extreme readings eventually reverting toward their norms and notes similar spikes around the 1999 to 2000 dot-com era when a small group drove oversized moves.
Both he and Turnquist push back on one-for-one comparisons with that period. "It is not the same market environment now versus 2000," Krom said, arguing today's pattern comes down to how concentrated the market has become.
For your money, the takeaway is simple: index headlines can mask a lot of crosscurrents. If your portfolio holds more than the handful of giants steering the benchmark, expect a different ride than the S&P's smooth surface suggests.
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