According to Investing.com India, Evercore counts 140 S&P 500 members with negative beta, marking the highest on record. The Russell 3000 measure stands at 373 stocks, more than 10 times its long-term average of 36. This represents 6.5 standard deviations from the mean and statistically occurs once every 99 million years. Negative beta means a stock has moved opposite to the index over a defined trailing period, with the S&P 500 and Nasdaq trending upward and at or near record highs.
As reported by Investing.com India, the Magnificent Seven stocks in the S&P 500 comprise about 35% of the index, meaning approximately 493 companies account for 65% of the index, or roughly 0.13% each. This high concentration within indexes allows a small number of stocks to drive the overall index while most other companies can fall. Since August 2, Nvidia gained 6.8% and the Nasdaq 100 rose 5.1%, while the Dow fell 4.6%, utilities declined 5.6%, and real estate dropped 8.6%. The S&P is up about 1% overall, with those declining stocks and sectors moving against a rising index resulting in negative beta statistics.
According to Investing.com India, the S&P negative beta series spiked near 70 during 2000 and 2001, and the Russell measure ran above 200 in the mid-1990s and again around 1999. Both periods preceded serious corrections, though neither graph shows anything alarming near the 2008 financial crisis. The key takeaway is that index returns and the average stock's return have come apart to an unprecedented degree, with anyone owning stocks potentially facing a rude awakening when reading their latest brokerage statement. The current record levels suggest this disconnect between index performance and individual stock returns may be reaching historically extreme levels.
