Tech Selloff Hits Cap-Weighted Index Holders Hardest
Investors in S&P 500 funds weighted by company size saw larger declines than those in equal-weight funds on Monday.
Updated on Nov. 4, 2026 in Stock Markets
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Eight of the 11 S&P 500 sectors gained on Monday as technology stocks sold off, with consumer discretionary, staples, utilities and financials leading the rotation. Some individual technology names are now more than 20% below their highs.
Why it matters
Reports suggest large asset managers may be reducing technology exposure, which has driven broad selling of tech names. For households holding index funds, the split between tech-heavy and equal-weight benchmarks shows how concentrated market gains have become.
The S&P 500 market-cap index fell 0.5% on Monday while the equal-weight index rose 0.7%, a gap that reflects the technology drag. Year-to-date, the SPDR S&P 500 ETF (SPY) is up more than 11%, but quarter-to-date it is down about 1%.
The players
Kenny Polcari
Market strategist whose comments on sector rotation shape investor sentiment toward stock allocation decisions.
Schwab Network
Financial television network distributing market commentary to individual investors and brokerage clients.
The details
Market-cap weighted indexes give the largest companies, many in technology, the biggest influence on the index level. When those names fall, the headline index can drop even while most sectors rise, as happened Monday. Equal-weight indexes, which hold every company at the same size, can rise in the same session because gains in smaller holdings offset the decline. Households whose retirement accounts track a cap-weighted index therefore feel the tech selloff more directly than those in equal-weight funds.
Timeline
Monday: eight of 11 S&P 500 sectors gained as technology sold off.
Tuesday: strategist Kenny Polcari discussed the sector rotation on Schwab Network.
Quarter-to-date: SPY down about 1% and QQQ down more than 7%.
Money Landscape
Year-to-date gains in the SPDR S&P 500 ETF and the Invesco QQQ Trust show that large technology holdings have driven much of the market's advance this year. The quarter-to-date reversal shows how quickly that concentration can shift when sector preferences change.
If your retirement account is concentrated in a cap-weighted S&P 500 fund, its value is more exposed to large technology holdings than an equal-weight fund would be. Households reviewing their allocations should discuss how much concentration they are comfortable with with a qualified financial professional.
The takeaway
Monday's split shows that headline index moves can mask broad sector activity beneath them. Check how your holdings are weighted before assuming a single index reflects your full exposure.
Further reading
For broader context on how these moves play out across portfolios, explore Stock Markets coverage.
Source note: This article includes information reported by Asianet News Network Pvt Ltd.
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