Bank of America warns of excessive concentration in US stock market activity: Current market highly similar to the peak of the 2000 dot-com bubble.

According to BlockBeats, a recent report by Michael Hartnett, Chief Investment Strategist at Bank of America, on June 1st, points out that the current structure of the US stock market bears a striking resemblance to the peak of the 2000 dot-com bubble. Investors should be wary of the risks associated with the later stages of a bull market and gradually shift towards a defensive portfolio. Data shows that the S&P 500 index hit a record closing high on the last trading day of May, but only 20 component stocks simultaneously reached new all-time highs, most of which are concentrated in the artificial intelligence and semiconductor sectors. Hartnett notes that when the dot-com bubble peaked in March 2000, only about 20 stocks also reached new highs. The recent surge in US stocks has been primarily driven by the AI industry chain. In May, Micron Technology (MU) rose 87.8%, SK Hynix rose 81%, Advanced Micro Devices (AMD) rose 45.6%, and Samsung Electronics rose 43%. Driven by this, the Nasdaq Composite Index surged 25% in the two months from April to May, marking its best performance for the same period in over two decades. However, several market breadth indicators are weakening. BCA Research data shows that as of May 20, only about 55% of the S&P 500 components were above their 200-day moving average; the Advance-Decline Line has been declining since mid-April, indicating that while the index is reaching new highs, fewer and fewer stocks are participating in the rally. Hartnett believes that while the market speculation frenzy may not be over yet, central bank tightening and a high-interest-rate environment could ultimately be the turning point for this bull market. He advises investors to gradually increase their allocation to long-term bonds, defensive sectors, and sectors that lagged behind at the end of the bubble to mitigate the risk of a potential market correction.