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The equal-weight S&P 500 tumbled Thursday, putting the index on track to close in a correction as U.S. stocks reeled from President Trump’s announcement of far-reaching tariffs.
The equal-weight S&P 500 fell as much as 4.4% Thursday, its biggest intraday decline since June 2022 when inflation was running at a 40-year high. The index fell 4.1% and is now on track to reach correction territory. This is defined as a decline of 10% from its recent peak.
The equal-weight S&P 500, as its name suggests, gives equal weight to every component of the index, meaning a 1% move in the share price of the index’s smallest company has as much impact as a 1% move in the price of its largest. The standard capitalization-weighted S&P 500, on the other hand, assigns stocks an index weight that is proportionate to the company’s market value.
The equal-weight S&P 500’s correction signals the current sell-off is broader than the declines earlier this year. The Magnificent 7 – which led stock market gains through 2023 and into 2024 – entered a corrective phase in late February due to increased economic uncertainty, and moderated earnings growth, which prompted investors to take profits. A week later, the tech-heavy Nasdaq Composite also slipped into a correction, followed by the cap-weighted S&P 500 a week later.
About 80% of the stocks in the S&P 500 were trading in the red on Thursday afternoon after President Trump unveiled sweeping tariffs that economists and investors worry will slow growth while raising prices for businesses and consumers.
