The recent tech selloff, spurred by concerns over capital spending in AI, has led to a rotation into value stocks, benefiting the equal-weighted S&P 500. This shift has been driven by the index's diversified sector exposure, particularly in industrials, utilities, and financials, which has allowed it to outperform its market-cap-weighted counterpart. The tech-heavy S&P 500 has faced increased volatility and downside risks, prompting investors to seek more stable investment options. SocGen strategists have recommended the equal-weighted S&P 500 as a strategic investment, citing its alignment with long-term "America First" policies and its relatively low valuation compared to historical averages. This strategic shift is further supported by the index's ability to capitalize on the tech sector's current challenges.
The Direxion Daily S&P 500 Bull 3X Shares (SPXL) experienced a significant decline, dropping 4.87% to $176.94 at 11:00 AM on Monday, January 27.