Top-Heavy S&P 500 Looks Primed for Correction to Morgan Stanley
- Growth scare could be followed by rate scare, upending markets
- Narrow equity breadth makes market susceptible to shocks
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So few stocks are buttressing the S&P 500’s record-setting rally that the market is vulnerable to shocks, particularly rising rates, according to Mike Wilson, Morgan Stanley’s chief U.S. equity strategist.
As an example of the narrowing market breadth, Wilson pointed to Friday, when Apple Inc.’s 5% gain could be framed as accounting for all of the total return of the S&P 500 and Nasdaq 100. For the week, the S&P 500 climbed 0.7% to an all-time high while the equal-weight version of the index fell 1.5%, a sign that the average stock didn’t participate in the advance like megacaps.