Key Highlights

● Nasdaq new lows outnumbered new highs for a 39th consecutive session.

● The exchange logged 342 new lows against 82 new highs on Thursday.

● The S&P 500 logged 40 new highs against only four new lows.

● The Nasdaq Composite fell 694.00 points to 26,008.86 after a record close on October 6.

Nasdaq-listed stocks setting new 52-week lows outnumbered those hitting new highs for the 39th consecutive session on Thursday, October 22, according to one market commentator. By his count, new lows exceeded new highs by 343. Market data showed 342 new lows against 82 new highs on the exchange.

The streak has persisted even as the Nasdaq Composite hit a record close of 27,599.89 on October 6, a sign that the index's gains have been powered by a relatively small group of large companies while many smaller listings struggled.

A narrow market, measured another way

New highs and new lows count how many stocks are trading at their best or worst levels of the past year. When an index climbs but new lows keep outnumbering new highs, analysts describe the rally as narrow: a handful of heavyweights are carrying the average while the typical stock lags.

The Nasdaq is home to thousands of listings, from trillion-dollar technology giants to small biotechs and micro caps. Its main indexes are weighted by market value, so the mega caps dominate the headline numbers while the new-high and new-low tally captures the breadth of the whole exchange.

Thursday made the gap wider

On Thursday, the Nasdaq Composite sank 694.00 points to 26,008.86, its steepest drop since June 5, as artificial-intelligence and chip stocks sold off. Decliners beat advancers 2,766 to 2,022.

The selling hit small and mid-sized chip companies especially hard after Lam Research (NASDAQ:LRCX) warned that supply constraints would last into 2027. FormFactor (NASDAQ:FORM), MACOM Technology (NASDAQ:MTSI), Semtech (NASDAQ:SMTC) and Cohu (NASDAQ:COHU) were among the smaller semiconductor names that tumbled.

AI-power and construction names also suffered. MasTec (NYSE:MTZ), Dycom (NYSE:DY) and Primoris hit 52-week lows as investors questioned the financing of AI data centers after Meta Platforms (NASDAQ:META) disclosed heavy spending plans.

The NYSE and S&P told a different story

The picture was mixed elsewhere. On the New York Stock Exchange, advancers narrowly beat decliners, 1.01 to 1, but there were 366 new lows against 173 new highs.

The S&P 500, by contrast, logged 40 new highs against only four new lows, and another count of 47 new highs was the most since July. That reflected record closes in consumer staples and health care, as investors rotated into defensive stocks and the 10-year Treasury yield fell back below a closely watched threshold for the first time since September 22.

About two of every three S&P 500 stocks rose even as the benchmark suffered its worst day since July.

What the streak signals

The commentator wrote that the market action beneath the surface was solid, but cautioned that "it will take more than one or two days to change the trend." The persistent excess of new lows on the Nasdaq suggests that many of its smaller members have not shared in the AI-driven gains of recent months.

Sentiment indicators were also mixed. A weekly investor sentiment survey showed bears outnumbering bulls, and a sentiment watcher wrote: "Maybe we'll finally get a change in sentiment."

Breaking the new-low streak

A turn in the streak would require more Nasdaq stocks reaching fresh highs, which typically happens when gains broaden beyond the mega caps. Next week's results from Microsoft (NASDAQ:MSFT) and Alphabet (NASDAQ:GOOGL) on October 28, the Federal Reserve's decision the same day, and Amazon (NASDAQ:AMZN) and Intel (NASDAQ:INTC) on October 29 could set the tone. Lower Treasury yields, which tend to help smaller companies, will be another factor to monitor.