S&P 500 Near Records While 96% of Semiconductor Stocks Fall

The S&P 500 sits approximately 0.1% below its October 6 record, according to Capital Blueprint, but the index performance masks significant declines across the broader market. While the composite holds near highs, the majority of individual stocks have experienced drawdowns that define what analysts are calling a stealth bear market. This divergence creates a specific timing issue for the White House with the midterm elections scheduled for November 3.

FAST Graphs defines this regime as one where several stocks fall more than 20% while the overall market remains stable. EBC applied the term to a grinding decline on March 30, 2026, and Real Investment Advice used it to describe capital erosion in 2022. TheTradingTools tracks this via a Hidden Bear Index, which flags a regime when the equal-weight index is two points further below its trailing high than the cap-weighted index, provided the cap-weighted index is down less than 10%. As of October 12, this flag had been active for 18 sessions, with the equal-weight index sitting 4.3% off its high.

Capital Blueprint reports that 96% of semiconductor stocks are down more than 20% from their June highs, compared with about 4% of banks. The firm notes that Microsoft, NVIDIA, Apple, and Meta Platforms added roughly 300 index points over three quarters, according to Citadel Securities. The other 496 members of the S&P 500 collectively subtracted about 150 points. This concentration means that gains in a handful of megacap technology firms are offsetting losses in the rest of the market.

Reuters reported on September 18, 2026, that many Americans are not participating in the current market rally. Gallup data shows stock ownership at 62% of Americans in 2025. Ownership rates vary sharply by income: 87% among those earning $100,000 or more, versus 28% among those earning under $50,000. Because ownership tracks income, weakness in typical stocks does not affect all voters equally.

Wilson’s firm published historical data showing the strongest average return in the year following midterms, 23%, occurred under a Republican president with a split Congress. The firm warned against letting election noise drive portfolios. Silver’s forecast gives Democrats a 74.8% chance of winning the Senate and a 93.1% chance of winning the House. No cited research links weak market breadth directly to election outcomes.

Wilson views closing the gap between the cap-weighted and equal-weight indexes as dependent on Treasury volatility. If bond volatility remains high, he sees the index at roughly 7,300. Jamie Dimon stated on October 13 that rates and deficits continue to shift under the surface regarding the broader economy. The equal-weight index is up 12.54% this year with dividends, but the average stock's drawdown remains a separate measure from the composite index's performance.