In contrast, the S&P 500 has become heavily reliant on a few stocks, with “the highest weighting for the top 10 that we’ve ever seen,” according to Archibald. This concentration risk was evident when a downturn in a few top tech stocks caused the entire index to drop by as much as 1 percent.
Christine Poole, CEO and managing director of Globe Invest Capital Management, observed, “Breadth can stay thin for a while, but it also means that the market could be more sensitive to any sort of negative news and some sort of shock to the system. You’ve got a handful of stocks, maybe even one stock, leading the charge.”
In Canada, large firms like Shopify Inc., Toronto-Dominion Bank, and Bank of Montreal have actually held back the market. The Big 3 telecommunications stocks — BCE Inc., Rogers Communications Inc., and Telus Corp. — have also been significant drags.
Despite these…
