Time To Rotate The Tires & The Portfolio?

The S&P 500 fell 0.68% and the Nasdaq 100 lost 2.28% today on disappointing earnings calls from Tesla and Netflix. They also weighed on the S&P 500 Information Technology sector, which was down 2.0%. Neither Tesla or Netflix is a technology company according to S&P. Tesla is in the S&P 500 Consumer Discretionary sector (down 3.4% today), while Netflix is in the Communication Services sector (down 2.5% today). Of the other MegaCap-8 stocks, only Apple, Microsoft, and Nvidia are in the S&P 500 Information Technology sector. Alphabet and Meta are also in the S&P 500 Communication Services sector. Amazon is in the Consumer Discretionary sector along with Tesla. Nevertheless, all eight are widely viewed as BigCap Tech stocks.

While the MegaCap-8 caused their three sectors to underperform the S&P 500 today, the other sectors outperformed: Utilities (1.8%), Health Care (1.8), Energy (1.3), Consumer Staples (0.8), Financials (0.7), Materials (0.2), and Real Estate (-0.4). In other words, the MegaCap-8 might be starting to take a breather after their huge run-up since January, while the bull market broadens out to include the S&P 492 (table). We still recommend overweighting Financials and Industrials.