BlockBeats news, on June 1, Michael Hartnett, Chief Investment Strategist at Bank of America, stated in his latest report that the current structure of the U.S. stock market exhibits strong similarities to the peak phase of the 2000 dot-com bubble, and investors should remain vigilant about risks in the late stage of the bull market and gradually shift toward defensive positioning.
Data shows that the S&P 500 reached a record closing high on the last trading day of May, but only 20 components simultaneously hit new all-time highs, most of which are concentrated in the artificial intelligence and semiconductor sectors. Hartnett noted that during the peak of the dot-com bubble in March 2000, a similar number—around 20 stocks—also reached new highs.
The recent rally in U.S. stocks has been primarily driven by the AI industry chain. In May, Micron Technology (MU) rose 87.8%, SK Hynix increased by 81%, AMD gained 45.6%, and Samsung Electronics climbed 43%. Fueling this momentum, the Nasdaq Composite Index surged 25% over the two months from April to May, marking its strongest two-month performance in over two decades.
However, several market breadth indicators are weakening. According to BCA Research data, as of May 20, only about 55% of S&P 500 components were trading above their 200-day moving averages; the advance-decline line has been declining since mid-April, indicating that fewer stocks are participating in the rally despite the index reaching new highs.
Hartnett believes that although the market speculation frenzy may not yet be over, tighter monetary policy and a high-interest-rate environment could ultimately become the turning point for this bull market. He advises investors to gradually increase allocations to long-term bonds, defensive sectors, and asset classes that underperformed toward the end of the bubble to mitigate potential market correction risks.