As the S&P 500 nears a new record high, there are signs of weakness below the surface

The S&P 500's approach to a record high reflects the performance of the index as a whole, but the average stock tells a different story. According to the source data, roughly 60% of S&P 500 constituents are trading more than 20% below their own all-time highs — a gap that suggests gains have been concentrated in a relatively small group of large companies rather than spread broadly across the index.

This divergence matters because index-level strength can mask uneven conditions underneath. When a handful of heavyweights drives returns, the index may look resilient even as many individual holdings lag. Market participants often watch breadth measures — such as the share of stocks participating in a rally or trading above key moving averages — as a gauge of whether an advance is broadly supported or narrowly led.

What to watch: whether breadth improves as the index tests new highs, or whether leadership remains concentrated. Neither outcome is inherently bullish or bearish, but the breadth picture can help contextualize how durable an index-level move may be.