US stocks are sitting at record levels. Earnings season has started fine, and on the surface, things look steady. But the mood underneath feels quieter than before.
Nearly 1,000 company executives sold their own shares this month, while only about 200 bought. That is the highest sell-to-buy gap in five years. These are people who see the business numbers before anyone else. When so many of them decide to cash out at the same time, it usually means they feel prices already reflect a very good outcome.
That does not mean trouble is around the corner. It does mean upside may be getting harder to find.
Earnings are okay, but not surprising anymore
Around three-quarters of companies reporting so far have beaten earnings expectations. That sounds solid.
But this is shaping up to be the weakest earnings surprise rate in about a year. Growth is still there, just not accelerating. In a market that has already gone up a lot, that slowing momentum matters more than it would have earlier in the cycle.
AI is also being looked at more carefully now. Spending is massive, and investors are starting to ask whether demand will justify it. Recent results from Microsoft brought that question into focus, and the reaction was hesitation, not excitement.
Big money is getting more careful
After several years of strong gains, the S&P 500 is trading above its long-term average valuation. At these levels, markets become less forgiving.
Institutional investors are not panicking, but they are stepping back a bit. Hedge funds are cutting single-stock exposure, and large investors are rotating away from the most crowded growth trades.
The takeaway is simple. This does not feel like the end of the market’s run. It feels like the end of easy gains. From here, returns are likely to be more selective, and expectations matter as much as earnings.