The three major indices

Price change from end of September to end of October 2026, rounded to two decimals.

What hit tech

October was the Nasdaq’s worst month since March 2025. Late-month earnings from the tech giants revived doubts about whether their massive AI spending will pay off. On the final trading day, October 30, Intel plunged about 29% after weak fourth-quarter guidance. The Nasdaq and the S&P 500 both posted their worst sessions since June that day.

What’s behind the S&P 500’s decline?

The S&P 500 is weighted by market cap, so when its largest companies fall they can drag the whole index down, even if many other stocks rise. The equal-weight S&P 500 gives every company a similar weight. In October it rose about 4.9%, while the standard index fell. According to month-end reviews, around 72% of S&P 500 stocks finished October higher.

That is the key to reading the month: weakness in the headline index does not necessarily mean weakness in most stocks. Here it reflects a concentrated decline in the heaviest-weighted names, alongside gains across much of the rest of the market.

Why did the Dow behave differently?

The Dow’s make-up and weighting method differ from those of the S&P 500 and the Nasdaq. It holds large, established companies from a range of industries, and each stock’s weight is set by its share price, not its market value. As a result, declines in the tech giants do not hit it the way they hit cap-weighted indices.

Is money rotating?

The gap between the indices is consistent with rotation, a shift in investor preference away from growth and tech stocks toward other companies and sectors. After years of sharp gains in parts of tech, questions about valuations, profitability and the scale of AI investment may be prompting a reassessment of exposure to the sector.

Index performance shows that preferences are shifting. Gauging how deep the trend runs also requires tracking flows between sectors. In October, energy was among the standout gainers on the back of higher oil prices, and healthcare, utilities and consumer staples also advanced.

This may signal broader diversification and less reliance on a small group of mega-caps. If the trend holds, it could support a more balanced market, with gains resting on a wider base of companies and industries.

The bottom line

October is a reminder to look past the headline indices when reading the US stock market. Large tech companies drove a big share of returns for a long stretch. Gains spreading to other sectors may now signal a change in what is driving the market.

The questions to watch are relative valuations across sectors, how concentrated portfolios and indices have become, and whether companies in other industries can grow earnings and cash flow. If the trend continues in the coming months, especially with broader earnings improvement, it could mark a shift toward a market whose returns rest on a wider and more diverse economic base.