As the S&P 500 nears a new record high, there are signs of weakness below the surface

The S&P 500's approach toward a new record high contrasts with conditions beneath the index surface. According to the source, about 60% of stocks in the index are down more than 20% from their all-time highs — a striking divergence between the headline index and the typical constituent.

This matters because index-level strength can be concentrated in a relatively small group of large companies. When a handful of heavyweights drive gains, the index may rise even as many individual stocks lag. Market participants often describe such periods as narrow leadership, and they can complicate how investors interpret broad benchmarks.

What to watch from here is whether participation broadens. If more stocks begin recovering toward prior highs, the advance may rest on a wider base. If the gap persists, the index's record level could say less about the average stock's health than it appears.