Do You Know? About 45% of stocks in the S&P 500 had a negative three-month beta, according to a recent Goldman Sachs note. That means their returns moved opposite to the broader index over the measured period.
The unusual divergence is drawing attention because the S&P 500 can remain near record levels even while many individual stocks move in the opposite direction.
What happened in the market
Goldman Sachs found that about 45% of S&P 500 stocks had negative three-month betas. CNBC separately found that nearly 40% of S&P 500 stocks had negative three-month betas against the index, while 17% had negative one-year betas based on weekly returns.
Beta measures how a stock moves relative to the rest of the market. A negative beta indicates that a stock’s returns moved in the opposite direction to the S&P 500 during the period being measured.
The divergence was also visible in recent market breadth. On the Monday cited in the report, the S&P 500 rose 1.5%, while 30 stocks touched 52-week lows and seven reached new highs.
Why the index can diverge from many stocks
Adam Turnquist, chief technical strategist at LPL Financial, said the widening gap largely reflects the concentration of the S&P 500. A small number of mega-cap technology companies have an outsized influence on the benchmark, so strong performance from those stocks can lift the index even when many other shares are declining.
“It only takes a few of those mega caps names to work, and a lot of the smaller weighted stocks don’t need to work,” Turnquist told CNBC.
Bradley Krom, director of investing strategy at WisdomTree, said large moves in individual stocks can offset one another at the index level when companies respond to different factors at different times.
“Beta is a function of correlation and volatility,” Krom said.
He said the individual stocks driving returns do not have the same historical relationship with one another that they have had in the past.
Technology and energy are pulling in different directions
The report linked part of the divergence to the market’s focus on artificial intelligence. Semiconductor makers, hardware companies and other AI infrastructure beneficiaries have benefited from substantial capital spending, while companies outside the AI trade have struggled to keep pace, according to the report.
Energy stocks with negative betas have been driven by different forces. Turnquist pointed to higher oil prices and higher energy stocks while the rest of the market traded lower, describing energy and more defensive sectors as important parts of the negative-beta pattern.
Evercore ISI recently identified 115 S&P 500 stocks with negative betas using a six-month measure. That group was skewed toward energy, utilities and consumer staples. Evercore ISI described energy as a “synthetic S&P 500 put option” because of how the sector had reacted to geopolitical pressure.
What analysts say could happen next
Turnquist said the number of negative-beta stocks could decline if market leadership broadens. However, he expects dispersion to remain elevated as investors stay selective toward beneficiaries of AI spending.
Krom expects the recent extreme readings eventually to revert toward the mean. He noted that similar spikes appeared around the 1999–2000 dot-com bubble, while also stressing that today’s leading technology companies are more mature businesses with established revenue and products.
Both analysts cautioned against treating the current pattern as identical to the dot-com era. Krom said today’s negative betas largely reflect the degree of market concentration.
Why this matters for investors
- Index returns may mask uneven performance: A rising S&P 500 does not mean most individual stocks are rising at the same time.
- Market concentration matters: A relatively small group of heavily weighted companies can have a large effect on the benchmark.
- Sector exposure is important: Technology, energy, utilities and consumer staples were identified as part of the current divergence.
- Negative beta is period-specific: The measure describes how stocks moved relative to the index over a specified period and is not a guarantee of future performance.
Bottom Line
The S&P 500’s performance is increasingly diverging from that of many individual stocks. Analysts cited market concentration, AI-related spending and energy-sector gains as key factors, while warning that the pattern could change if leadership broadens.
Source
This report is based on information published by CNBC Finance.
