LIVE MARKETS-Equal-weight S&P 500 hits 22-year low vs cap-weighted benchmark
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EQUAL-WEIGHT S&P 500 HITS 22-YEAR LOW VS CAP-WEIGHTED BENCHMARK
Amid uncertainties surrounding interest rates, tariffs and economic growth, traders are taking note that the equal-weighted S&P 500 index .SPXEW continues to underperform the cap-weighted S&P 500 index .SPX:
Indeed, more recent expectations for a pronounced relative strength shift back in favor of more old economy/cyclical/manufacturing companies, which are more represented in the equal-weighted index, have so far failed to materialize. In fact, on Tuesday, with the SPX up 6.2% YTD, and the SPXEW up just 3.9% so far this year, the SPXEW/SPX ratio fell to 1.182, or its lowest level since August 2003.
Along with this, given a strong resurgence in tech titans off the market's early-April lows, growth stocks .IGX are significantly outperforming value plays .IVX. The IGX is now up about 10% in 2025, while the IVX is up just 2.5%. This has put growth in record high territory relative to value.
With the SPXEW/SPX ratio showing a pattern of declining peaks and troughs from its early 2023 high, along with having now fallen to fresh multi-decade lows, the trend of the equal-weighted S&P 500 index underperforming the cap-weighted S&P 500 index remains firmly intact.
The ratio will need to reclaim its 2008 and 2024 lows around 1.189 to suggest it is potentially reversing. To signal a more protracted period in which the equal-weighted S&P 500 index outperforms the cap-weighted version, the ratio will not only need to reclaim its descending 200-day moving average, which ended Tuesday at 1.226, but also its April 2025 high at 1.256.
(Terence Gabriel)
EARLIER ON LIVE MARKETS:
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SPXEWSPXRatio07162025
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