American economist Peter Schiff has warned that weakening S&P 500 market breadth could signal rising downside risk even as the benchmark index remains near record highs.
In an X post on September 26, Schiff pointed to a growing divergence beneath the market’s surface.
While the S&P 500 is trading just below its all-time high, he noted that hundreds of constituent stocks remain well below their own peaks. According to Schiff, 430 companies in the index are trading an average of more than 21% below their highs, leaving roughly 86% of stocks in bear-market territory.
The gold bug argued that similar levels of market narrowness have appeared only twice in recent history: in January 1973 and during the dot-com era between 1999 and 2000.
Both periods were followed by major market downturns, with the S&P 500 eventually losing close to half its value. The 1973 signal preceded a prolonged bear market linked to economic stagnation and the oil crisis, while the 1999-2000 period was followed by the collapse of the technology bubble.
Big tech dominating S&P 500
His warning centers on S&P 500 breadth, a measure of how many stocks participate in a market rally. Strong breadth typically suggests gains are spread across a broad range of stocks, while weak breadth indicates that only a small number of companies are driving index performance.
Notably, large technology companies such as Nvidia (NASDAQ: NVDA) and Apple (NASDAQ: AAPL) account for an increasing share of the S&P 500’s market capitalization and have driven much of the index’s recent gains.
Meanwhile, the equal-weighted S&P 500, which gives every constituent the same influence regardless of size, has underperformed the traditional capitalization-weighted index in recent weeks.
S&P 500 crash signals
Other market indicators also point to weakening participation. The percentage of S&P 500 stocks trading above their 50-day and 200-day moving averages has declined, while many constituents remain more than 10% or 20% below recent highs.
Some analysts have also pointed to rising Treasury yields and widening credit spreads as factors that could increase S&P 500 correction risk if sentiment toward market leaders weakens.
Schiff’s latest comments align with his long-standing concerns about elevated asset valuations, persistent inflation pressures, rising government debt, and the broader economic outlook.
He has frequently argued that U.S. financial markets are vulnerable to a sharper downturn and continues to favor precious metals such as gold and silver as defensive assets.
However, not all market observers view the current breadth readings as evidence of an imminent crash.
Some analysts argue that today’s market differs from previous cycles due to the growing influence of passive investing and the dominance of a small group of highly profitable technology companies.
Featured image via Peter Schiff YouTube
