Investors have been forced to confront a disappointing reality in 2026: A handful of Big Tech companies have the power to vex investors who are bullish on the S&P 500, even though a sizable portion of the index’s members have seen their shares climb, or at least outperform.
For much of the past three years, stock-market bulls have been talking about a more broad-based rally as something that could help to keep pushing major indexes like the S&P 500 higher.
In this latest bull market for U.S. stocks, the largest names did much of the heavy lifting, which resulted in the 10 largest stocks by market value in the S&P 500 seeing their weighting in the index swell to more than 40% last year, according to research from Goldman Sachs.
Since then, things have started to shift, with more stocks outperforming the index. Yet the U.S. stock market booked a nasty first-quarter loss despite the S&P 500 SPX showing plenty of breadth in the first three months of the year, said Adam Parker, founder of Trivariate Research, in a phone interview.
For years, some on Wall Street — including Rob Arnott, chair of Research Affiliates — have warned that the S&P 500 has become heavily weighted toward a handful of corporate behemoths with high valuations.
Now those concerns are playing out in real time.
A wide array of stocks rallying in the index doesn’t mean the S&P 500 will necessarily perform better, yet investors tend to point to strong breadth as a “healthy sign” for the market, Parker cautioned.
By Trivariate’s tally, 238 stocks in the S&P 500, or nearly 48%, were up in the first quarter, while 57% of the index beat the stock-market benchmark.
|
Price performance |
Number of stocks |
Percentage of index |
|
Up > 20% |
63 |
12.6% |
|
Up > 10% |
128 |
25.6% |
|
Up |
238 |
47.6% |
|
Beaten market |
285 |
57.0% |
|
Down > 10% |
142 |
28.4% |
|
Down > 20% |
51 |
10.2% |
|
Source: Trivariate Research |
Still, the S&P 500 slumped 4.6% in the first quarter to mark its worst quarterly performance since 2022 as fears over high oil prices triggered by the Iran conflict hammered the market in March. Big Tech tumbled, with its outsize weighting overwhelming the index after the group also saw heavy losses in February amid worries over high valuations.
