The US stock market is changing! While the indices seem "calm," individual stocks are already experiencing "turbulent waves."

This year, the performance of the U.S. stock market has been generally stable, but there is a divergence in the performance among individual stocks.

Year-to-date, the S&P 500 index has risen 4.2%, seemingly recovering from the impact of DeepSeek and Trump's trade policies, with the VIX fear index also below historical averages. However, there are significant differences in the performance of individual stocks within the index.

According to media reports, the current U.S. stock market is showing an increase in "dispersion." The Cboe S&P 500 Dispersion Index has been rising for a year and reached its highest level since May 2022 on January 29.

Taking the "Seven Sisters" of tech stocks as an example, since investor concerns were triggered by DeepSeek on January 24, the overall stock prices of these seven companies have fallen by 0.8%, but the individual performances vary greatly: Alphabet is down 8.2%, while Meta has risen 10.6%.

This dispersion is even evident within the same industry. Companies viewed as AI infrastructure providers have also shown significant differences in stock performance. Data center equipment manufacturer Hubbell has fallen 13.1% since January 24, while data center operator Equinix has only dropped 1%, and chip manufacturer Nvidia has decreased by 2.3%.

For the U.S. stock market, the real risk is that once the trend of increasing "dispersion" among individual stocks ends, the S&P 500 index is often severely impacted. In other words, if all stocks begin to move in the same direction, the index will not be able to maintain stability through the offsetting gains and losses of individual stocks.

Dean Curnutt, CEO of Macro Risk Advisors, warns that volatility in the stock market will persist, and the correlation among stocks may suddenly increase without a major crisis, posing greater risks to the market.

Some believe that the reason for the divergence in individual stock performance may be that investors overreact to good news, blindly pushing up the stock market, while when bad news appears, they try to differentiate between winners and losers rather than symmetrically selling off all stocks.

However, the latest sentiment survey from the American Association of Individual Investors (AAII) shows that bears far outnumber bulls, which contradicts the assumption of "irrational exuberance."

Another possibility is the "dispersion" trading strategy of hedge funds. Over the past year, many hedge funds have used options contracts to bet on a decline in index volatility while simultaneously betting on an increase in individual stock volatility. This strategy has brought a 28% return to S&P 500 stocks in 2024, while also exacerbating market dispersion.

Additionally, media reports indicate that the enthusiasm of amateur traders for short-term options and the extensive use of derivatives in new ETFs may further distort market signals