Big Tech Loses Ground as Average S&P 500 Stock Outperforms

Wall Street spent October selling semiconductor stocks and buying consumer staples, as investors shifted away from some of the technology companies driving the artificial intelligence boom, Jared Blikre reported for Yahoo Finance.

Technology and semiconductor stocks have underperformed the broader US market as investors shift toward consumer staples and other sectors. [Photo: Scott Beale Flickr]

Consumer staples were heading for their strongest monthly performance in nearly five years, while semiconductor stocks suffered substantial losses.

The equal-weighted S&P 500 also pulled ahead of the traditional benchmark, signaling a broader shift in market performance beyond the largest technology companies.

The equal-weighted index, in which each S&P 500 constituent carries approximately the same weight, gained 2.5% over the month.

By comparison, the market-capitalization-weighted S&P 500 declined 0.9%, while the PHLX Semiconductor Index fell 12.5% after losing as much as approximately 15%.

The divergence reflects the pressure on major technology and chip companies amid concerns about the scale of artificial intelligence investment and the costs associated with building data centers.

Because the traditional S&P 500 assigns greater weight to companies with larger market capitalizations, declines among major technology stocks can weigh heavily on the benchmark even when many other companies are advancing.

Monday's trading session illustrated how quickly the trend can change.

Semiconductor stocks rebounded, with 57 of the 60 companies in a Yahoo Finance semiconductor basket recording gains.

The traditional S&P 500 consequently outperformed its equal-weighted counterpart that day.

However, the recovery did little to reverse the month's broader performance gap.

In September, the equal-weighted S&P 500 lagged the traditional index by 4.5 percentage points. Through Monday's close in October, it had moved ahead by approximately four percentage points.

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According to Yahoo Finance calculations, that swing was on track to become the largest one-month reversal in favor of the equal-weighted index since at least 1990.

The changing performance highlights a broader rotation in the US stock market, as investors reassess technology valuations and seek opportunities beyond the largest AI-related companies.