Market Rally Looks Strong, But Only 20 Stocks At All-Time Highs; Analysts See 2000-Like Pattern

The stock market just did something eerily similar to the dotcom bubble top in 2000, when a narrow group of stocks drove the entire rally.


The S&P 500 ended May at a record high, but there were only a small number of companies, mostly linked to artificial intelligence, that actually went up. Data shows that only 20 companies in the entire index touched their own record highs.


These include Morgan Stanley, Steel Dynamics, QUALCOMM, FedEx, JB Hunt, Goldman Sachs, Micron Technology, Apple, Cisco Systems, Nucor, NetApp, Palo Alto Networks, Broadcom, Fortinet, Hewlett Packard Enterprise, Delta Air Lines, Dell Technologies, CrowdStrike, Datadog, and Sandisk.


Experts believe this looks similar to what happened in the year 2000 during the dotcom bubble. Back then, only about 20 stocks hit new highs while the broader market was weak before the market eventually crashed.


A large number of these companies are from the technology and AI-related space, while a smaller share comes from traditional sectors such as banking, logistics, airlines, and manufacturing.


Companies like Micron Technology, AMD, Samsung, and SK Hynix saw very strong gains. These stocks are important because chips are the backbone of AI, data centres, and modern computing demand.


In May alone, AMD jumped about 50%, Micron surged around 85%, Samsung rose 43%, and SK Hynix climbed 81%. Because of this rally, the Nasdaq Composite index, which is heavily weighted toward tech stocks, rose 25% in just April and May. This was its best two-month performance in more than 20 years.


Michael Hartnett at Bank of America said that the current "speculative price action" in the stock market may still continue for some time, but he also believes it is getting closer to a peak stage.


He adds that the main factor that could eventually end this rally is central banks and rising interest rates. He calls this phase a "post-bubble" situation.