The S&P 500 climbed about 0.5%, putting it on track for its 28th record close of 2026 and its first since August. The Nasdaq also extended its record run, while the Dow gained modestly as oil prices and Treasury yields eased.
The striking part is market breadth. More than 70% of S&P 500 stocks remain at least 10% below their recent highs, according to Morgan Stanley research cited by Barron’s. That means the index can sit at a record even while most constituents are still well below their own peaks.
Mega-Caps Are Carrying the Index
The gap between the headline index and the average stock has widened sharply.
Over the past three months, the market-cap-weighted S&P 500 has gained about 3.9%, while the equal-weight version has fallen around 1.8%. The equal-weight index gives each constituent roughly the same influence, so its weakness highlights how dependent the current rally has become on a handful of mega-cap names.
That concentration was already visible in September, when roughly 78% of S&P 500 stocks declined even as the benchmark itself remained close to record territory. The same breadth problem has persisted into October.
MarketWatch offers another measure of the divide: the median S&P 500 constituent is still roughly 17% below its 252-day high.
AI Earnings Keep Overpowering High Rates
Technology and AI remain the main source of strength.
Analysts expect S&P 500 third-quarter earnings to rise about 29.5% year over year, with AI infrastructure companies contributing more than half of that growth. Only about one-third of S&P 500 constituents have risen since mid-September.
That earnings momentum has allowed large technology shares to withstand a difficult bond backdrop. The 10-year Treasury yield recently moved above 5.3%, even though higher rates normally weigh heavily on tech stocks.
The latest Nasdaq rally shows the same pattern: strong AI earnings are offsetting valuation pressure from high rates.
