Tech Dominance Sparks Goldman Sachs Warning: Market Repeats Late-1990s Pattern

Goldman Sachs has identified an unusual split in the US stock market that bears an uncomfortable resemblance to the late-1990s technology boom. According to the bank, a record share of S&P 500 companies now display negative beta, meaning they tend to fall when the benchmark rises and rise when it falls.

Over a short recent window, this group has approached half the index. Over a one-year horizon, the share is smaller but still historically elevated. Beta measures how a stock moves relative to the market, with readings above 1 indicating amplified moves in the same direction.

The sudden prevalence of negative beta among large-cap stocks is less a sign that hundreds of companies have become defensive hedges than a reflection of the index's concentration. A small cluster of mega-cap technology and artificial intelligence names now accounts for a large portion of the S&P 500's market value, pulling the major averages away from the experience of the average stock.

Goldman has compared this pattern with the technology bubble, when a handful of high-flying names dominated the market. Today, concentration is visible in other statistics as well: the largest names carry higher betas than the rest of the index, and the gap between the S&P 500 and the median stock's distance from its own 52-week high has been among the widest in decades.