New York, July 13, 2026, 17:07 (EDT)
S&P 500 dropped 0.8% Monday as chip stocks tumbled and oil spiked nearly 10%, shaking risk appetite. But the bigger story for investors was under the surface: the index’s equal-weight version slipped just 0.03%. A big financials ETF moved up 0.65%, while its tech fund counterpart fell 2.42%. The 0.76 point gap between the main and equal-weight S&P suggested big caps were rotating, not dumping stocks.
This shift is coming right before second-quarter bank results and a busy week for inflation numbers. Any real S&P 500 rally now needs profit growth beyond just tech. If not, the index stays tied to chip stocks, which investors dumped the most on Monday.
The S&P 500 ranks companies by market value, meaning the largest move the index most. In an equal-weight index, each stock counts about the same. At the close Monday, weakness was focused at the top end: Nasdaq-100 names and chip stocks fell a lot more than the equal-weight S&P or financials.
| Instrument | Main exposure | Monday change |
|---|---|---|
| S&P 500 index | Large caps, market cap weighted | -0.79% |
| Equal-weight S&P 500 ETF (RSP) | Same stocks, more even weighting | -0.03% |
| Nasdaq-100 ETF (QQQ) | Mega-cap growth names | -1.90% |
| Russell 2000 ETF (IWM) | Small-cap U.S. stocks | -0.85% |
| Financials ETF (XLF) | Financial stocks in the S&P 500 | +0.65% |
| Technology ETF (XLK) | Tech stocks from S&P 500 | -2.42% |
| Semiconductor ETF (SOXX) | U.S. chipmakers | -4.77% |
Rotation was uneven instead of marketwide. Financials outperformed technology by 3.07 percentage points and semis by 5.42 points, but small caps dropped 0.85% and decliners on the NYSE led advancers 1,517 to 1,211. Market breadth stayed weak. Bob Lang at TheStreet called rotation “a healthy condition” when money remains in stocks; Monday showed that only in some sectors, not the full market. The Wall Street Journal
Tuesday morning brings the next test, with JPMorgan Chase NYSE:JPM, Bank of America NYSE:BAC, and Citigroup NYSE:C set to post Q2 results. The banks’ reports should give a quick read on whether profits in banking and capital markets are enough to back the shift out of tech.
FactSet Research Systems NYSE:FDS data points to the gap investors are weighing. The S&P 500’s forward price-to-earnings ratio stands at 20.5, topping its five-year average of 19.9 and ten-year average of 19.0. Earnings-per-share growth expected for the second quarter is still much higher for tech than financials.
| Segment | Q2 2026 year-on-year EPS growth estimate |
|---|---|
| S&P 500 | 23.6% |
| Financials | 6.6% |
| Banks | 11% |
| Investment banking and brokerage | 30% |
| Information technology | 63.3% |
| Semiconductors and equipment | 131% |
Earnings expectations are already high. FactSet says the S&P 500’s current 23.6% estimate could climb to 29.4% if earnings surprises hold up like they have for the past decade. So far, 89% of the first 18 reporters have topped forecasts by an average of 14.5% as of July 10. That’s put more focus on company guidance and where growth is coming from, not just whether firms beat the headline numbers, and helps explain why Matrixtrade’s Andrew McElroy warned that a bullish chart breakout could fail and keep the market drifting sideways.
Bullish sentiment is giving some support here. Todd Salamone, senior vice president of research at Schaeffer’s, said the put/call ratio has backed off extreme optimism and is now showing more caution. That leaves “more gas in the tank,” he said. Salamone pointed to 7,615 and 7,700 as resistance levels where upside may stall, and 7,433 as support where buyers could step in. The market closed Monday at 7,515, about 1.3% under the first resistance and 1.1% above support. Schaeffers Investment Research
The downside risk is up front. Crude just settled up 9.4%, futures were betting on at least a quarter-point Fed hike before year-end, and fresh inflation numbers and Fed Chair Kevin Warsh’s appearance on Capitol Hill are on the calendar this week. “Less cushion” and “a lot of unknowns,” said Thomas Martin, senior portfolio manager at GLOBALT. If yields climb again, stocks could see lower valuations. Any earnings miss from chip names would likely hurt the same group forecast to lead on profit gains. Reuters
Mondays looks like a sector rotation so far, not a broad rally. Bulls would want to see banks push financials higher, the S&P above 7,615, and equal-weights staying ahead. Bears need bad bank guidance, a drop under 7,433, and more chip losses. A banks and inflation mix on Tuesday will test if price gains turn into profit gains.
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