LIVE MARKETS-Mega-caps reclaim market leadership 

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MEGA-CAPS RECLAIM MARKET LEADERSHIP

The market's biggest companies are back in the driver's seat.

After a volatile late spring and early summer, mega-cap tech has come roaring back, helping the cap-weighted S&P 500 .SPX once again outperform its equal-weighted counterpart .SPXEW. The SPX/SPXEW ratio is on pace for its biggest monthly gain since May 2023, fueled by strong September performances from the Magnificent Seven , semiconductors .SOX, communication services .SPLRCL and large-cap technology .SPLRCT. Those groups are up between 3.8% and 8.3% this month, while the broader market has been far less impressive. The SPX is up just 0.23% in September, versus a 3.9% decline for the equal-weighted index.

For the year, the cap-weighted S&P 500 is ahead 12.5%, compared with a 9.8% gain for the equal-weighted benchmark. If that gap holds through year-end, it would mark a fourth straight year of outperformance for the cap-weighted index.

The SPX/SPXEW ratio closed Thursday at 0.9039, putting it within reach of the 0.9098 high set in mid-May. That marked the strongest reading since April 2003.

Getting here, however, has been anything but straightforward.

After peaking in October 2025, the ratio slid steadily into late February before rebounding sharply to a new cycle high in May. Leadership then swung back toward the broader market, dragging the ratio down to 0.8371 by late July. Since then, mega-caps have regained their footing, lifting the ratio back to within a whisker of its May peak.

The key question now is whether this latest rally marks the start of a more durable shift back toward mega-cap leadership.

A breakout above the May peak would lend further support to the view that leadership is swinging back toward the market's largest companies. On the downside, a drop below the 200-day moving average near 0.8674 would suggest the recent rebound is losing momentum.

Still, the bigger picture remains constructive. Since early 2023, the ratio has carved out a series of higher highs and higher lows, the classic definition of an uptrend. A break below the July low at 0.8371 would be needed to seriously undermine that longer-term bullish structure and suggest a more sustained period of equal-weight leadership may be emerging.

(Terence Gabriel)

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