An agreement with Iran was not reached over the weekend. Part of the reason for the market to apparently ignore the potential impact of higher energy costs for longer is the unprecedented concentration of tech leadership in the major indexes. The 10 biggest stocks in the AI narrative now comprise 40% of the S&P weight.
Rare set up sets stage for bulls
We have a record S&P, while 5% of the members have fallen to 52-week lows, something that has only happened 4 times in the last 100 years, always before a major correction.
Likewise, we find today that high beta stocks are at all-time highs relative to the S&P, while low volatility stocks are at all-time lows relative to the S&P.
Clearly, there are extremes taking place in today’s market, propelled by the unprecedented spending momentum of the AI data center buildouts.
Related: Louis Navellier sends powerful message on AI FOMO trade, economy
All that said, the history of the market also finds that when the S&P surges 6 weeks in a row, gaining over 10% during the streak, which has only happened 10 times since 1950, it has only been lower once a year later.
That’s a 90% success rate over the past 75+ years.
Importantly, the S&P has averaged a 17.1% return during those periods, twice the long-term average return.
Both the bulls and the bears have histories that say they are right. For now, the bulls are winning and winning big.
The big story in the data center companies is “order backlogs,” as they can’t yet fulfill rising demand. Withso many states welcoming data centers, I do not expect this boom to slow.
We have a big week ahead. We may see nominee Kevin Warsh voted in as the new Fed Chairman.
On Tuesday, we get the April Consumer Price Index, or CPI, and on Wednesday, the Producer Price Index, or PPI, is released. Thursday, we get retail sales, and Trump flies to China for a 2-day summit with Xi.
Interesting times for investors, but with 84% of the S&P companies reporting earnings beats, the highest since 2Q21, the momentum remains positive for the best reason.
Related: Warren Buffett doubles down on stock market message for 2026
