Explaining the start of 2026
A recent conversation with a client went like this; explain to me what is going on in this market right now.
In the simplest terms, we are seeing weakness in the technology sector, and one of the easiest ways to see how the market moves is to look at how the S&P 500 is composed.
The S&P 500 is composed of 500 U.S.-based stocks and is market‑weighted, meaning that a company’s size is proportional to its weight in the index. As a result, the largest companies can drive a significant portion of the S&P 500’s overall performance.
In contrast, there is an equal‑weight version of the S&P 500 that includes the same companies but assigns each one an equal weight of 1/500 in determining the index’s performance.
For perspective, the top 10 stocks in the S&P 500 carry a 37% weight in the index, and 32% of the index is allocated to the IT sector. While it’s not entirely “as goes tech, so goes the S&P 500,” it’s close.
Either way, to start the year, the S&P 500 is up just 0.65% through February 24, 2026, while the equal‑weight S&P 500 is up 6.21% over the same period. This illustrates a rotation out of tech and into other asset classes that were largely “forgotten about” at the beginning of the year.
*Past performance is no guarantee of future results, and all investing is subject to risk. It is not possible to invest directly in an index.