"Comparable to the dot-com bubble": what are the risks of the biggest shift in the S&P 500 in 30 years

The large-scale capital rotation on Wall Street increasingly reminds analysts of the events of the early 2000s, when the dot-com bubble burst. Investors are witnessing a major paradigm shift: the era of undivided dominance of bigtechs is coming to an end, giving way to corporate securities in classic sectors of the economy. For the stock market, this brings both prospects of recovery and serious risks of drawdown, analysts warn.

The equilibrium index S&P 500, in which the shares of all companies are equal, regardless of their size, rose by 5.5% in the first 32 trading sessions of the year. At the same time, the traditional S&P 500 benchmark index, weighted by capitalization (where the dynamics for many years were determined by technology giants), showed only a symbolic growth of 0.1% over the same period. The gap between these two indicators at the start of the year became the strongest for more than 30 years, since 1992, writes MarketWatch.

The benchmark S&P 500 index, which has served as the market's main barometer for decades, usually outperforms or moves in line with its equilibrium counterpart. The reverse has been observed only a few times over the past quarter century. One of the most striking examples occurred at the peak of the dot-com bubble in the 2000s, when investors began to move en masse from Internet startups into undervalued stocks of traditional companies. Similar dynamics were recorded during the recovery period after the 2008 crisis, as well as in the bear market in 2022, the publication notes.

For investors, this historical anomaly means the end of the "narrow market" period, when portfolio growth was ensured by betting on a small group of technology leaders. The focus in the S&P 500 is shifting to traditional segments: energy (up 22.7% since the start of 2026), consumer staples (up 12.7%) and industrials (up 13.1%). At the same time, the IT and consumer staples sectors, overloaded with technology companies, sagged by 4.5% and 5%, respectively, MarketWatch reports. What is happening brings both hopes for stock market recovery and new risks.

"It's a leadership shift in the stock market, and it's more comparable to the dot-com bubble of 2000," notes Diane Behle, senior manager of investment solutions research at SimCorp. If the "Magnificent Seven" tech giants can no longer pull the S&P 500 upward, the stock market could be in danger of collapsing - even though the overall "health of the market is improving" by broadening the range of companies participating in the rally, Bechle warned.

Andrew Briggs, director of portfolio management at Plaza Advisory Group, pointed out to MarketWatch the fundamental nature of the change. According to him, traditional companies are "starting to realize" how they can benefit from the introduction of AI into production processes, and "it's showing up in their corporate profits." Briggs sees conservative U.S. Federal Reserve policy as a key risk to the trend: if the U.S. central bank does not move to lower rates, soaring securities of companies from cyclical sectors could come under heavy pressure.

This article was AI-translated and verified by a human editor