STOCKS | S&P 500 and Nasdaq Reach Record Highs Amid AI Optimism

On May 21, Jin10 reported that the S&P 500 and Nasdaq indices have reached historic highs, driven by optimism surrounding AI and strong earnings reports. However, the current rally lacks breadth, with most gains attributed to large tech stocks. UBS analysts noted that over the six weeks ending May 15, the market-cap-weighted S&P 500 index outpaced the equal-weighted S&P 500 index by the largest margin in at least 35 years. Given the significant market value growth driven by AI-focused large tech stocks, UBS advises investors to reduce overly concentrated positions and be cautious of concentration risks. Additionally, UBS mentioned that as the earnings season concludes and market attention shifts back to unresolved Middle Eastern issues, the market may enter a temporary pause. Senior market analyst at Swissquote Bank, Ipek Ozkardeskaya, has been monitoring the issue of market breadth, noting that most gains are concentrated in a few tech companies priced with perfect expectations. She warned that any disruption in their pricing logic could lead to a collapse similar to a bubble burst.