The S&P 500 reached a record close of 7,736.52 on Aug. 4, its 23rd all-time high of 2026, even as several of the market’s most closely watched chip and artificial-intelligence stocks remained sharply below their earlier peaks. The Dow Jones Industrial Average also crossed 54,000 for the first time, while the Nasdaq Composite stood roughly 2% below its June record.
That split places the summer rally on firmer footing than a surge driven solely by a handful of mega-cap technology companies. The S&P 500 was up 11.4% for the year through Aug. 4, and its equal-weighted version had returned 14.9%, compared with 13.2% for the traditional market-cap-weighted benchmark. Smaller S&P 500 constituents, which receive greater influence in the equal-weight index, have recently contributed more than the market’s largest names.
Record index masks a tougher period for chips
The Nasdaq’s lag behind the S&P 500 and Dow reflects pressure on stocks that led the earlier AI-driven advance. Nvidia traded about 20% below its high, while a selloff spread through parts of the semiconductor industry after the July 27 listing of CXMT. U.S.-listed chip names were also affected by a margin-related shock tied to South Korea, adding to a volatile stretch for a sector accustomed to carrying much of the market’s momentum.
Some of the moves were severe. Roundhill’s memory-focused DRAM ETF fell 31.8% during July, while SanDisk lost 46.6% over the month. SanDisk nonetheless remained more than 412% higher for the year, illustrating how large gains accumulated earlier in 2026 left some semiconductor-linked shares vulnerable to abrupt reversals.
The weakness did not extend evenly across technology. Palantir, which is classified as a software company rather than a semiconductor manufacturer, rose 29% on Aug. 4 after reporting second-quarter results above expectations. Microsoft gained 15.5% in a single late-July session, setting a record for the largest one-day addition to market value by a U.S. company.
Those opposing moves make broad technology indices less useful as a shorthand for the AI trade. Hardware, memory, chip manufacturing and enterprise software have faced different earnings expectations, supply conditions and valuation pressures. A retreat in chip stocks can therefore coincide with gains in software groups positioned to sell AI products and services.
Sector breadth supports the benchmark
The S&P 500’s market-cap structure leaves technology with an outsized role, but it does not make the index exclusively dependent on the sector. Information technology accounts for roughly 29% to 30% of the benchmark. The remaining 70% is divided across 10 other sectors, giving financials, health care, industrials and consumer-facing companies enough combined weight to cushion technology weakness.
Financials represent about 13% to 14% of the index, while health care accounts for around 11% to 12% and consumer discretionary companies roughly 10% to 11%. Communication services and industrials each comprise approximately 8% to 9%. Consumer staples account for around 5% to 6%, while energy represents about 3% to 4%.
Real estate, materials and utilities each make up roughly 2% to 3% of the benchmark. Individually, those groups have limited influence, but together with larger non-tech sectors they connect the index to banks, insurers, hospitals, manufacturers and consumer businesses whose earnings cycles differ from those of chip designers.
That diversification helped lift the S&P 500 during the June-to-August period despite the semiconductor retreat. It also helps explain why the Dow, whose construction gives it a different mix of companies and a price-weighted methodology, was able to move above 54,000 even while the technology-heavy Nasdaq remained below its high.
Equal-weight performance points to broader participation
The performance gap between the equal-weight S&P 500 and the Nasdaq-100 was particularly pronounced in July. The equal-weight S&P 500 outperformed the Invesco QQQ Trust, which tracks the Nasdaq-100, by 7.6 percentage points during the month, the widest spread on record for that comparison according to the figures provided.
An equal-weight index assigns each of the S&P 500’s constituents an allocation of roughly 0.2%. That reduces technology exposure to about 13%, compared with around 30% in the market-cap-weighted version. The method requires regular rebalancing because stocks that rise quickly must be trimmed and laggards added back toward equal weights.
Over longer periods, the difference has been relatively narrow. From April 2003 through July 2026, SPY, the SPDR S&P 500 ETF Trust, delivered an annualized total return of 11.47%, compared with 11.25% for RSP, the Invesco S&P 500 Equal Weight ETF. The recent advantage for equal weighting therefore marks a meaningful change in leadership rather than proof that one approach permanently dominates the other.
Concentration remains unusually high
Broader sector participation has not removed the S&P 500’s concentration risk. The index’s 10 largest holdings account for more than 37% of its total weight, the highest level since the dot-com era and far above the long-run range of roughly 20% to 25%.
Apple accounts for an estimated 6.6% to 7.6% of the index, Nvidia about 7.0% to 7.5%, and Microsoft roughly 4.3% to 5.2%. Amazon represents about 3.6%, Alphabet 3.1% to 4.1%, Meta 2.4% to 2.9%, and Broadcom about 2.5%. Berkshire Hathaway, Tesla and JPMorgan round out the largest holdings, with weights near 1.7%, 1.7% and 1.5%, respectively.
Nvidia’s index weight alone exceeds the estimated weighting of either the energy or utilities sector. That gives its daily moves considerable influence over the benchmark, even when advances in financials, industrials or health care are improving market breadth underneath the surface.
With the S&P 500’s total market value near $70 trillion in mid-2026, the market can absorb a correction in a major technology company more easily when participation is spreading across sectors. Yet the top-heavy structure means any renewed decline in the largest AI-linked companies would continue to carry disproportionate consequences for index funds and portfolios tied to the benchmark.
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