What the S&P 500 is hiding about the economy

On its face, 2025 has been a good year for the stock market. The S&P 500 was dragged out of its tariff-induced springtime slump by a small subset of AI-forward power players whose spectacular gains defied an otherwise softening economy. Even now, despite a rocky November, the benchmark index is up more than 12 percent since the start of the year.

A group of trillion-dollar brands known as the “Magnificent Seven” - Alphabet, Amazon, Apple, Meta, Microsoft, Nvidia and Tesla - has been at the forefront of those gains, thanks in large part to corporate spending and intense interest in artificial intelligence. But economists and investors are raising concerns about the companies that aren’t part of the AI investment boom - in other words, most businesses in the United States.

An index that leaves out the seven high-flying tech firms - call it the S&P 493 - reveals a far weaker picture, as smaller and lower-tech companies report lackluster sales and declining investment.

“You have the headwind of de-globalization and tariffs, and the tailwind of AI … those forces are battling to a draw, and in that crosswind you get winners and losers,” said Moody’s Analytics chief economist Mark Zandi. “Anything that is not connected to AI is throttled lower.”


https://finance.yahoo.com/news/p-500-hiding-economy-151410876.html