As the equity benchmark bounced to fresh records in recent weeks, the number of companies traded on the New York Stock Exchange making new highs outpaced those making new lows by only 88, an analysis by Oppenheimer & Co. showed. Such narrow breadth has been a harbinger of poor performance: a difference of 100 or less while the S&P 500 broke out has been followed by below-average returns for the index over the next 12 months, based on data going back to 1972.

Chart watchers already have reasons to fret. Shares of Big Tech have been the main drivers of the rebound, suggesting that investors are playing it safe in the face of uncertain US trade policy and fiscal worries. The Magnificent Seven Index of megacap stocks is up 36% from its April lows, compared to the S&P 500’s 25% advance. Meanwhile, just 10% of the S&P 500’s stocks are powering its returns, down from a 22% average between 2010 and 2024, according to Bloomberg Intelligence data compiled by strategists Gina Martin Adams and Gillian Wolff.

“Broader participation is important,” said Ari Wald, senior analyst at Oppenheimer, who conducted the analysis. “Rallies with most stocks participating, both large and small, are the rallies that typically continue.”

Another sign that participation has barely budged can be seen in the S&P 500’s equal-weighted counterpart — a proxy for the average stock in the index — which hasn’t marked a record since Nov. 29.

“I thought that off of the lows, with such a ferocious run, you’d find a broader move during that period,” said independent market strategist Jim Paulsen.

Mixed Signals

The focus on the market’s shaky internals comes as traders face conflicting signals following the two-month snapback in stocks. On one hand, the economy has held up despite tariff uncertainty and inflation has remained under control, while risk-takers have been rewarded by gains in both the biggest tech stocks as well as in more speculative corners of the market.

Yet the trade war is never far from investors’ minds: President Donald Trump began unveiling his tariff plans on Monday, with the US setting levies for nations such as Japan, South Korea and South Africa starting in August. The S&P 500 fell 0.8% in response, though the index remains less than 1% from a new record.