🚨 SHOCKING: U.S. stock market concentration reaches near-record levels
The U.S. stock market has become increasingly concentrated, with a small number of companies accounting for a large share of total market value. The S&P 500 Herfindahl-Hirschman Index (HHI), a measure of market concentration, has risen to approximately 195 points, approaching historical highs.
For context, during the 2000 dot-com bubble, the HHI peaked near 125 points, indicating a significantly lower level of concentration compared to today. Since the 2020 pandemic, this metric has more than doubled, reflecting the growing dominance of mega-cap and large technology-focused firms.
This concentration means that market performance is being driven by a limited group of stocks, while many smaller companies contribute relatively less to overall index movements. As a result, broader market stability has become more sensitive to the performance of these leading firms.
Market participants may want to closely monitor concentration trends, sector leadership, and risk distribution, as elevated concentration can influence volatility and correlation across traditional assets.
