MW Rotation out of Big Tech sends S&P 500 on longest losing streak since January. How far will it run?

By Christine Idzelis

S&P 500 is struggling this week, in contrast to an ETF that equally weighs stocks in the index

Big Tech stocks, which have an outsized weighting in the S&P 500, are under pressure so far this week.

Big Tech is dragging down the S&P 500 even as the broader universe of stocks in the index has been holding up so far this week, with investors weighing how long the rotation away from technology-related equities may last.

On Thursday, the S&P 500 SPX booked a fifth straight day of losses, marking its longest losing streak since the stretch ending Jan. 2, according to Dow Jones Market Data. Megacap stocks known as Big Tech can heavily influence the trajectory of the S&P 500 due to their outsized weighting in the index.

Seven closely watched Big Tech companies are down sharply this week, including Facebook parent Meta Platforms Inc. (META), Amazon.com Inc. (AMZN), Microsoft Corp. $(MSFT)$, Nvidia Corp. (NVDA), Apple Inc. $(AAPL)$, Tesla Inc. $(TSLA)$ and Google parent Alphabet Inc. $(GOOGL)$, according to FactSet data.

"Over recent days, technology and AI-related stocks have traded lower on what we believe is normal rotational-trading behavior and profit-taking after a very strong couple of positive months off the April lows" before Nvidia's quarterly earnings report next week, said Anthony Saglimbene, chief market strategist at Ameriprise Financial, in a note Thursday.

Big Tech stocks have struggled lately but a popular ETF that holds them, the Roundhill Magnificent Seven ETF MAGS, is still up 27.6% over the past 12 months, according to FactSet data.

"Growth and momentum factors that were very positive in helping drive tech and the broader U.S. stock market higher over recent months are now going through a bit of a healthy reset, which is natural, in our view," said Saglimbene.

The S&P 500 ended Thursday with loss so far this week of 1.2%, while the Big Tech ETF has seen steeper weekly drop of 3.5%, according to FactSet data. That's in contrast to the gain of less than 0.1% this week through Thursday for the Invesco S&P 500 Equal Weight ETF RSP, an exchange-traded fund that equally weighs stocks in the U.S. large-cap equities index.

"We have been viewing the S&P 500 as consisting of two parallel markets, namely the AI-affected and everything else," said Scott Chronert, a U.S. equity strategist at Citigroup, in a Citi Research note Wednesday.

"Broadening as to fundamental and performance contribution beyond the AI tailwind is a necessary condition of a healthy and higher index," he wrote. "Yet, very clearly," the group of stocks related to tech, artificial intelligence and growth "needs to participate, as a function of its index weighting."

Read: Stock market may be obscuring 'important realities' about the U.S. economy

The equal-weight S&P 500 is "sufficiently oversold to make it a reasonable trade here for readers worried about a pullback" in the tech-heavy, market capitalization-weighted version of the index, according to a DataTrek Research note emailed Thursday.

But, "as a reminder, our long-held view is that the equal-weight S&P is not as productive a long-term investment" as the cap-weighted version, DataTrek co-founder Nicholas Colas wrote in the note. "It does, however, occasionally have its uses, and the current setup appears to be one of them."

August 'air pockets'

So far this month, the equal-weight S&P 500 is outperforming the cap-weighted version of the index.

The S&P 500's August gain of 0.5% lags the Invesco S&P 500 Equal Weight ETF's 1.2% advance. As for Big Tech, the Roundhill Magnificent Seven ETF finished Thursday down 0.4% this month, according to FactSet data.

"I do not like August since there are 'air pockets,'" said Louis Navellier, chief investment officer of Navellier & Associates, in emailed remarks that he had made during his podcast Thursday. "We are now in the midst of a big mean-reversion rotation, which is unfortunate because the earnings environment has been stunning."

The U.S. stock market closed lower Thursday as investors weighed reports showing a rise in initial jobless claims during the week ending Aug. 16 and an unexpected drop in regional manufacturing activity measured by a survey by the Federal Reserve Bank of Philadelphia. In other economic data released Thursday, the S&P 500's flash reading on U.S. manufacturing in August was stronger than expected.

The S&P 500 ended down 0.4% on Thursday, while the tech-heavy Nasdaq Composite COMP and the Dow Jones Industrial Average DJIA each fell 0.3%. The Roundhill Magnificent Seven ETF had a larger loss of 0.5% and the Invesco S&P 500 Equal Weight ETF fell 0.4% Thursday, according to FactSet data.

-Christine Idzelis

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August 21, 2025 16:42 ET (20:42 GMT)

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