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Sound Advice: November 2, 2026

How is the stock market doing, excluding the big tech stocks?

The short answer: The market outside of big tech is doing meaningfully better than the headline indexes suggest.

The average stock is beating the cap-weighted market

The cleanest measure of "the market ex-big-tech" is the S&P 500 Equal Weight, where each of the 500 stocks counts the same instead of being dominated by the mega-caps. Through Friday October 30, it's up +14.0% on price (+15.3% with dividends) year-to-date, versus about +11.8% total return for the regular cap-weighted S&P 500. That gap is the direct result of tech dragging the cap-weighted index: tech is roughly 40% of the standard S&P 500 but only about 16% of the equal-weight version.

October showed the split starkly

Tech just had its worst month since March 2025, while the rest of the market gained:

Index

October return

Nasdaq-100

-6.65%

Nasdaq Composite

-5.30%

S&P 500 (cap-weighted)

-0.93%

Russell 2000 (small caps)

+0.53%

Dow Jones

+1.70%

S&P 500 Equal Weight

+4.90%

October numbers per Investing.com and S&P Dow Jones Indices. The Nasdaq-100 shed over $2 trillion in market value for the month and entered its third correction of the year — a drop of more than 10% from its October 6 record high.

What's driving it

The selloff is concentrated in AI mega-caps, not the broad market. Big Tech earnings raised doubts about AI spending: Alphabet reported negative free cash flow of $9.1 billion as capital expenditures more than doubled, Amazon's trailing free cash flow swung to negative $42.4 billion, and Intel plunged after weak guidance. Meanwhile, the rotation into non-tech is real: on one of the worst tech days, more than 400 S&P 500 companies advanced even as the Nasdaq-100 dropped, and in Friday's rout energy was the strongest sector while technology lagged.

Latest session

Friday, October 30 closed with the S&P 500 down 1.8% at 7,580, the Dow down 1.1%, and the Nasdaq Composite down about 2.9% — but even that day's damage was tech-led.

Bottom line: strip out the mega-cap tech names and 2026 has actually been a strong, broad-based year — up roughly 14% — with defensive and value areas now outperforming as investors question the AI spending trade.

How does that compare to a low-cost market index ETF or mutual fund?

Here's how the low-cost index funds stack up against that ex-big-tech picture.

The returns

 

A plain low-cost index fund tracks the cap-weighted market — which means it holds exactly the big tech that's been dragging this year. Through October 30:

Investment

2026 total return

Annual fee

S&P 500 Equal Weight (RSP) — "ex-big-tech" proxy

+15.3%

0.20%

S&P 500 index (VOO, FXAIX, IVV)

+11.8%

0.015%–0.03%

Total US market (VTI, VTSAX)

~+11.8%

0.03%–0.04%

S&P 500 total return from YCharts and Stifel; equal-weight figures from ChartRow; Vanguard total market fund returns from Vanguard. 

So the equal-weight market is ahead by about 3.5 percentage points this year — the average stock has beaten the mega-cap-led index.

The fees

The cheapest S&P 500 trackers cost almost nothing: Fidelity 500 Index (FXAIX) at 0.015% ($1.50 a year per $10,000), Schwab's SWPPX and State Street's SPYM at 0.02%, and Vanguard's VOO or iShares' IVV at 0.03% ($3 a year per $10,000). Fidelity even offers a zero-fee large-cap fund (FNILX) at 0.00%. The equal-weight ETF (RSP) charges 0.20% — six to 10 times more than a plain index fund, though still cheap in absolute terms ($20 a year per $10,000).

The long-term context matters

This year's equal-weight edge is a recent rotation, not the norm. Over the past five years, cap-weighted funds have won big: VOO is up about 80% versus roughly 71% for total-market VTI, and the equal-weight strategy has lagged the cap-weighted S&P 500 over most of the past decade because mega-cap tech was the engine of the market. Equal weight's 10-year annualized return is about 10.5% versus roughly 11.6% for the cap-weighted index.

Bottom line

A low-cost index fund is up about 12% this year — a strong year by any historical standard, just 3.5 points behind the equal-weight market because its biggest holdings are the ones falling. The fee difference (0.015% vs 0.20%) is real but trivial compared with the performance gap in either direction. The honest framing: Nobody knows which style wins next year. If big tech recovers, the plain index fund wins; if the rotation into the other 493 stocks continues, equal weight or broad small-cap exposure wins. Many investors simply hold the plain index fund and accept that it will lag in years like this one — or split the difference between cap-weighted and equal-weighted exposure.

 

N. Russell Wayne

Weston, CT  06883

203-895-8877

www.soundasset.blogspot.com

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