S&P 500 Holds Up on AI Megacaps as Equal-Weight Index Falls and CCC Junk Spreads Widen to About 12 Points

The S&P 500 is holding up, but the calm is hiding weakness beneath the surface, according to the author.
Lately the tech sector has climbed about 5%, while the equal-weight S&P 500, which represents the average stock, has fallen about 5%. A handful of AI megacaps are the only thing holding the index up.
Credit is also cracking in the weakest names. CCC and lower junk spreads have widened to about 12 percentage points over Treasurys, the widest in a while.
The author called it one of the narrowest markets in memory, saying that if the AI trade wobbles, there is no broad market underneath to cushion it. The trend is still up, but narrow leadership combined with widening credit spreads is the combination to watch. $RSP