Goldman Sachs Warns of a 'Hidden Bear Market' in U.S. Stocks; About 60% of S&P 500 Constituents Have Entered Bear Territory

As reported by TechFlow, on November 3, the S&P 500 index is only about 3% below its latest all-time high, but about 60% of its constituents have entered bear-market territory. Bobby Molavi, a trader at Goldman Sachs, noted that this market setup is quite remarkable. He said the so-called 'oddity' is that the tech giants driving AI-related stocks higher through their capital expenditures, and the companies receiving those investments, have seen their stocks fall at the same time.

Molavi, head of execution services for Goldman Sachs in Europe, the Middle East and Africa, wrote in a client report: 'I do not understand why both sides are being punished by the market at the same time, especially when the underlying expectation is still that AI will change everything.' He described the current market setup as a 'hidden bear market.' As investors pull out of AI-related stocks amid concerns about the sustainability of massive AI spending, the market has seen large-scale rotation, with tech stocks hit hard in recent weeks. On the other hand, most S&P 500 constituents have still risen over the past month as money moves from crowded trades into defensive sectors and previously underweighted areas.

Source: TechFlow