Investors looking beyond megacap tech may like what they see
With a handful of stocks attracting most of the recent headlines, it’s easy to forget that investors continue to find opportunities across a broad range of sectors.
Case in point: The S&P 500 Equal Weight Index is up 15.4% year to date – outpacing the “standard” market-cap-weighted S&P 500 Index, in which the largest megacap names have the most influence on returns (see the chart).
S&P 500 Equal Weight Index (SPXEWTR) vs. S&P 500 Index (SPXT)
Bloomberg, calculations by Horizon, data as of 09/04/2026
That outperformance comes as the economy and earnings growth are stronger and broader than expected, prompting investors to look beyond semiconductors and other tech segments for growth opportunities in energy, financial services, healthcare, and others. Even with relatively high interest rates, the market can rise and broaden further because earnings (rather than multiple expansion) are doing the work.
That said, technology remains a driving force of growth across various market sectors. The AI cycle has also been stronger than many expected and is expanding beyond the narrow group of tech company winners (hyperscalers, chipmakers, etc.) to businesses in multiple industries that increasingly use AI to boost productivity and profits.
Looking ahead, we see the biggest potential threats to the current market environment as persistent inflation and restrictively high long-term bond yields that overwhelm the recent strength in corporate earnings. In contrast, a Fed rate hike is far less of a risk and could even help stabilize long-term yields. New inflation data later this week will provide additional insights into whether this summer’s positive trends are likely to continue and what the Fed’s next move could be.
In the meantime, despite rising single-stock volatility below the overall index level, investors appear largely committed to broad-based equities, a good sign for the market going forward.