U.S. Stock Market Experiences Significant Divergence

According to BlockBeats, recent market analysis by KobeissiLetter reveals a notable divergence in the U.S. stock market. The average stock correlation within the S&P 500 index over the past three months has dropped to 0.13, nearing its lowest level since 2018. This metric assesses how individual stocks within the S&P 500 move in relation to the index itself. The current low correlation indicates that most stocks are moving independently rather than following the overall market trend. In contrast, during the market downturn in April, the average stock correlation was approximately 0.50. In summary, the U.S. stock market has become highly fragmented, with a few large-cap technology companies driving most of the gains. Meanwhile, the majority of stocks have not participated in this upward trend, exhibiting a pattern of declining without corresponding increases.