The S&P 500 -- an index made up of the 500 largest companies in the U.S. -- is up around 10% for the year. From the outside, this seems like a strong, positive return.
But 96% of the gains were driven by just five technology stocks, most of which were powered by excitement over artificial intelligence.
The powerhouse stocks, according to Fortune, are (AAPL), (MSFT), (GOOGL), (AMZN) and (NVDA). Meanwhile, as of May 16, 341 stocks in the S&P 500 underperformed the index for the year, and nearly half of the index's stocks are negative, according to Motley Fool.
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"When we look back at the first five months of the year, we can only conclude that if you wandered away from the very small part of tech that's a funnel, you underperformed," Jim Cramer said on 'Mad Money' May 30. "The market's so narrow that if it weren't for ChatGPT and the recognition of what AI could be worth, the averages might be having a terrible year."
Cramer, echoing something investors are beginning to notice, explained that, though a select few tech companies have pushed the S&P to rally nearly 10%, "not much else is working."
The S&P is a cap-weighted index, meaning that the bigger companies, such as Apple and Microsoft, have a bigger impact on the index.
"If you looked at an equal weighting of the S&P, you'd have a down year. It's arguably the best year if you're a tech investor or the worst year if you're concentrated in anything else," Cramer said. "It's so bad that you have to wonder if this disparity can really continue."
JP Morgan analysts said last month that market breadth -- the percentage of companies in the S&P that are driving returns -- is very weak, indicating that investors are bullish on a few select stocks, not on the market itself.
"Straying from tech might continue to be the kiss of death from this market. "
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