S&P 500 Equal-Weight Index Posts Record Outperformance Over Nasdaq 100 in July
Alina Collins
In July the S&P 500 equal-weight ETF (RSP) beat the Nasdaq 100 tracker QQQ by 7.6 percentage points — the widest single-month gap since records began in 2003 — as money rotated out of tech leaders into the broader market.
Why did the equal-weight index suddenly outperform?
The equal-weight S&P 500 — where every stock counts equally, regardless of market cap — rallied in July, while the cap-weighted S&P 500 and Nasdaq Composite fell for a second straight month.
This means → capital that had been piled into a handful of mega-cap tech names is spreading across the rest of the index.
In plain terms = instead of a few heavyweights lifting the class average, the rest of the class is now scoring well on its own.
How badly did the chip sector sell off?
The Philadelphia Semiconductor Index dropped 20.6% in July, yet its year-to-date gain still sits near 60% — the sell-off was steep precisely because the prior rally was steeper.
Memory stocks fell hardest: the Roundhill Memory ETF (DRAM) plunged 31.8% in a single month.
Among its holdings, SanDisk crashed 46.6% in July but remains up roughly 412% year-to-date; Micron slid 28.7%, still up over 188% for the year.
This reflects a violent reversal in AI-driven momentum trades in July, even as the sector's full-year gains remain substantial.
How wide is the split inside Big Tech?
Microsoft added $449.7 billion in market cap in a single session — a record one-day gain for any U.S.-listed company — with its stock rising 15.5%.
Amazon surged 15.3% the day after reporting earnings; Alphabet gained roughly 6.7% to 6.9% on the same day.
Apple, meanwhile, dropped sharply on the last trading day of the month.
In plain terms = even under the same "Big Tech" label, individual stocks moved in opposite directions — buying "tech" as a blanket bet no longer works.
What do strategists expect next?
Kevin Gordon, head of macro research and strategy at Charles Schwab, said the equal-weight index's strength reflects improving market breadth backed by U.S. economic growth and corporate earnings.
He cautioned that AI development remains in its early stages; investors should expect sharp swings to continue and consider building diversified portfolios.
This means → whether equal-weight can keep outperforming hinges on earnings breadth beyond the AI theme delivering — it is not that tech has failed, but that the rest of the market needs to prove it can perform too.
Content is for reference only, not financial advice.