You might be shocked by how many stocks are in a bear market right now

The headline index can mask significant divergence beneath the surface. While the S&P 500 hovered within 2 percentage points of its record closing high on Tuesday, a closer look shows that many individual stocks are faring far worse — a reminder that index-level performance is often driven by a relatively small group of large companies.

This gap matters for investors trying to gauge market health. When headline strength rests on a narrow set of leaders, the average stock may already be in a downtrend, even as the index looks resilient. That can create a misleading picture of overall risk appetite and breadth.

What to watch is whether this divergence narrows. If participation broadens and more stocks recover, the rally may rest on firmer ground. If weakness persists beneath a strong index, it can signal fragility that headline numbers alone won't reveal.