Goldman Sachs warns of a "hidden bear market" in US stocks, with approximately 60% of S&P 500 constituents already in a bear market.

on November 3, the S&P 500 index is only about 3% away from its latest all-time high, yet approximately 60% of its constituent stocks have already fallen into bear market territory. Goldman Sachs Group trader Bobby Molavi noted that this market dynamic is quite striking. He explained that the so-called "oddity" is that the capital expenditures by tech giants fueling AI-related stock rallies, alongside the stocks of companies receiving these investments, are actually declining simultaneously.

Molavi, Goldman Sachs' executive services head for Europe, the Middle East and Africa, wrote in a client report: "I do not understand why both sides are being penalized by the market at the same time, particularly when the baseline assumption is that AI will change everything." He characterized the current market landscape as a "hidden bear market." As investors withdraw from related holdings amid concerns over the sustainability of massive artificial intelligence expenditures, the market has undergone significant sector rotation, with technology stocks taking a heavy hit over recent weeks. Meanwhile, for the past month, the majority of components within the S&P 500 index have continued to advance, as capital flows from crowded positions into defensive sectors and areas that were previously underweighted.