The S&P 500 is approaching the fourth anniversary of a bull market that began October 12, 2022, having gained 117% with the index near record highs and volatility subdued.
The equal-weighted S&P 500 has trailed the market-cap-weighted benchmark by 52 percentage points since the rally began, the widest underperformance at this stage of a bull market since at least the 1990s.
Friday’s session showed the split in action: Crown Castle jumped 13.17% and Humana rose 12.60%, while T-Mobile US fell 12.52% and AT&T dropped 10.90%.
A bull market can look unstoppable on the surface and still be standing on shakier legs than the headline number suggests. The S&P 500 is nearing the fourth anniversary of a rally that began on October 12, 2022, having delivered a 117% advance with the index sitting near record highs and volatility historically low, according to Bloomberg News. Corporate earnings remain strong and, on paper, there are few obvious signs of strain in an implemented, already-realized four-year run.
A Rally Riding on Fewer and Fewer Stocks
The crack investors are watching is concentration. The equal-weighted S&P 500 — which gives every one of its 500 constituents the same influence rather than letting the biggest companies dominate — has trailed the standard market-cap-weighted benchmark by 52 percentage points since October 2022, the widest gap at this stage of a bull market since at least the 1990s, according to data compiled by Bloomberg. That means a shrinking number of mega-cap, AI-linked stocks are doing most of the heavy lifting for the index as a whole. Friday’s trading illustrated the market’s split mood: Crown Castle surged 13.17%, Humana climbed 12.60%, Moderna rose 10.87% and American Tower gained 7.83%, while T-Mobile US sank 12.52%, AT&T fell 10.90%, Verizon Communications dropped 10.80% and Coterra Energy slid 8.62%.
What This Means for Your Wallet
If your 401(k) or workplace retirement fund tracks a standard S&P 500 index fund, you’ve likely benefited from the 117% run — but that return has been driven disproportionately by a small group of giant technology and AI-linked companies, not a broad-based rise across the whole market. That matters because if sentiment toward AI spending shifts, the stocks driving most of the gains could also drive most of the pain, even if other parts of the market hold up fine.
Why It Works This Way
A market-cap-weighted index like the S&P 500 gives more influence to its biggest companies, so when a handful of giants rally hard while hundreds of smaller constituents languish, the headline index can still look great even though the ‘average’ stock is not keeping up — which is exactly what the 52-percentage-point gap with the equal-weighted index is showing. One practical step this week: look up whether your retirement fund is a standard cap-weighted index fund or an equal-weighted alternative, since that single detail determines how exposed you are to a narrow group of mega-cap stocks. Disclaimer: This analysis is for educational and informational purposes only and should not be construed as financial or investment advice.
What to Watch Next
Third-quarter earnings season and the upcoming US midterm elections could both test whether the rally can broaden out beyond its current leaders or whether narrow AI-driven gains continue to carry the index. Check the original Bloomberg News reporting via The Economic Times for further market analysis.
