New York, July 13, 2026 — The S&P 500 fell 0.8% on Monday, dragged lower by a sharp selloff in semiconductor stocks and a nearly 10% spike in crude oil that rattled risk appetite. Yet beneath the surface, a more nuanced story emerged: the equal-weight version of the index slipped just 0.03%, while a major financials ETF climbed 0.65% and its technology counterpart tumbled 2.42%.
The 0.76 percentage point gap between the market-cap-weighted S&P 500 and its equal-weight counterpart suggests that large-cap investors are rotating rather than fleeing equities. This shift comes just ahead of second-quarter bank results from JPMorgan Chase (NYSE:JPM), Bank of America (NYSE:BAC), and Citigroup (NYSE:C), due Tuesday morning, and a busy week for inflation data.
Rotation Under the Hood
In a market-cap-weighted index like the S&P 500, the largest companies have the biggest impact. The equal-weight version gives each stock roughly the same influence. Monday’s action showed weakness concentrated at the top: the Nasdaq-100 ETF (QQQ) fell 1.90%, and the semiconductor ETF (SOXX) plunged 4.77%, while the financials ETF (XLF) rose 0.65%. Small caps, as measured by the Russell 2000 ETF (IWM), dropped 0.85%.
Despite the outperformance of financials over tech by 3.07 percentage points and over semiconductors by 5.42 points, market breadth remained weak. On the NYSE, decliners led advancers 1,517 to 1,211. Bob Lang at TheStreet called the rotation “a healthy condition” when money stays in stocks, but noted that Monday’s move was confined to specific sectors rather than the broader market.
Bank Earnings on Deck
Tuesday morning brings a critical test as JPMorgan, Bank of America, and Citigroup report Q2 results. Their earnings and guidance will offer a quick read on whether profits in banking and capital markets are strong enough to sustain the rotation out of technology. FactSet Research Systems (NYSE:FDS) data shows the S&P 500’s forward price-to-earnings ratio at 20.5, above its five-year average of 19.9 and ten-year average of 19.0.
Earnings-per-share growth expectations for Q2 remain heavily tilted toward tech. The information technology sector is expected to post 63.3% year-over-year EPS growth, while semiconductors and equipment are forecast to surge 131%. In contrast, financials are seen growing just 6.6%, with banks at 11% and investment banking and brokerage at 30%.
High Expectations and Sentiment
Overall, the S&P 500’s Q2 EPS growth estimate stands at 23.6%. FactSet notes that if earnings surprises match the past decade’s trend, that figure could rise to 29.4%. So far, 89% of the first 18 reporters have beaten forecasts by an average of 14.5% as of July 10, putting the focus on company guidance and the source of growth.
Andrew McElroy of Matrixtrade warned that a bullish chart breakout could fail, leaving the market drifting sideways. Todd Salamone, senior vice president of research at Schaeffer’s, said the put/call ratio has retreated from extreme optimism, indicating more caution and “more gas in the tank.” He identified resistance at 7,615 and 7,700, with support at 7,433. The S&P 500 closed Monday at 7,515, roughly 1.3% below the first resistance and 1.1% above support.
Risks and Outlook
The downside risks are front and center. Crude oil settled up 9.4%, futures are pricing in at least a quarter-point Federal Reserve rate hike before year-end, and fresh inflation numbers plus Fed Chair Kevin Warsh’s Capitol Hill testimony are on this week’s calendar. Thomas Martin, senior portfolio manager at GLOBALT, cited “less cushion” and “a lot of unknowns,” warning that if yields climb, stocks could see lower valuations.
Monday’s action looks like a sector rotation so far, not a broad rally. Bulls will want to see banks push financials higher, the S&P 500 above 7,615, and equal-weight indexes staying ahead. Bears need bad bank guidance, a drop below 7,433, and further chip losses. Tuesday’s mix of bank results and inflation data will test whether price gains can translate into profit gains.
