Stocks are trading at record highs, and the market's main characters haven't changed.

Yahoo Finance's data whiz Jared Blikre flagged the stocks making new intraday record highs alongside the index on Friday. The names are a who's who of market leaders with only one exception — Nvidia stock (NVDA) was down after receiving a downgrade from New Street Research.

Apple (AAPL), Amazon (AMZN), Alphabet (GOOG, GOOGL), Costco (COST), Meta (META), Microsoft (MSFT), and Walmart (WMT), on the other hand, all saw their stocks trade at intraday records on Friday.

Investors can maybe point to the soft jobs report and the prospect of lower interest rates as a catalyst for the move. At least for a chunk of these winners.

Tech was the biggest winner of low-interest-rate environments over the last decade, and the so-called hyperscalers in the AI race — Amazon, Microsoft, Alphabet among them — are set to be the arms dealers should another speculative investment boom break out.

But on Wall Street, it appears that spending too much time in this market teasing out the fundamental particularities of why the same group of market leaders continues to lead the market is no longer a worthwhile exercise.

To wit: Piper Sandler's chief investment strategist Michael Kantrowitz on Wednesday dropped coverage of the S&P 500, writing that, "Talking about the S&P 500 to communicate investment insights to institutional investors has become an exercise in futility."

The 10 biggest stocks in the index account for almost 40% of the index's market cap, Kantrowitz noted. And both the index's returns and earnings growth are being driven by this small handful of companies.

Rather than reflecting a broad swath of the corporate world's fortunes, then, the so-called benchmark stock index has become captive to the AI trade. For some, this is not a flaw of the index, but a feature, as argued by strategists at the BlackRock Investment Institute last week.

Sure, the S&P 500 may seem to tip out of balance, reflecting the fortunes of a privileged few over the more measured progress (or struggles) of the quieter majority. But the concept of an index is that investors can capture the market return in whatever form that takes.

This dynamic often benefits the DIY investor class looking for cheap exposure to "the market," but it is a thorn in the side of portfolio managers who charge institutions more for their services as they seek to best the returns available to the masses.

Said another way, what institutional investors seek are returns — preferably returns that beat the market, of course — but most importantly, returns that do not come in whatever form the market takes. For big-money investors, safety is often paramount. And AI hype minting new multi-trillion dollar winners each week doesn't exactly scream safe by this measure.

Back in 2020, before the pandemic turned markets upside down, we talked to Tom Lee at Fundstrat who saw the rally in Tesla (TSLA) stock that year as a sign of investors chasing their benchmark. Tesla stock, at the time, was responsible for a large chunk of the gains in the Russell 1000 Growth index (VONG), an index favored as the benchmark by many of Fundstrat's clients at the time.

In an effort to make up this gap, clients had a simple card to play: buy Tesla.

Friday's market action — and much of what has been seen in stocks since May — seems reminiscent.

Because if the benchmark index is no longer a useful benchmark, a portfolio manager has a (seemingly) simple choice to make: either buy more of the stocks leading your benchmark, or find another way to explain your performance.

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