Only twice in history! The S&P 500 Equal Weight Index is expected to record seven consecutive weeks of declines this week.

US major stock indices remain relatively stable overall, but signs of weakness beneath the surface are intensifying. The S&P 500 Equal Weight Index is expected to fall for a seventh consecutive week this week. If the decline persists through Friday, it would mark only the third time in the index's history that it has recorded seven straight weekly losses. The previous two instances occurred during the dot-com bubble burst in 2002 and the U.S. stock market bear market selloff in 2022. Unlike the traditional market-cap-weighted index dominated by large technology stocks, the equal-weight index assigns the same weight to each constituent stock, making it a better reflection of the overall performance of individual U.S. equities. The divergence beneath the surface has been particularly pronounced in September. So far, only two of the S&P 500's 11 sectors have posted gains communication services and information technology both of which are home to a large number of tech giants. Financials have been the worst-performing sector in September, down nearly 7% for the month. Meanwhile, the KBW Bank Index has been declining steadily since hitting a high in mid-August and has now entered technical correction territory, meaning it is at least 10% below its recent high. This means that although the major indices have not shown significant declines, upward momentum is increasingly concentrated in a handful of large technology companies, while a large number of individual stocks and sectors are actually under considerable downward pressure. Compared to the sharp swings beneath the surface, U.S. major stock indices still appear relatively calm on the surface. The S&P 500 is currently on track to end the quarter at roughly the same level as the start of the third quarter. The Nasdaq 100 previously fell into correction territory but has since recovered much of its losses, showing some resilience even amid rising U.S. Treasury yields and growing concerns about risks in artificial intelligence investments. One important reason for this phenomenon is the ongoing rotation among sectors and individual stocks beneath the surface. While some stocks surge, others decline significantly, and these two forces offset each other at the index level, keeping the major indices broadly stable. Of note, the divergence between overall U.S. stock market index performance and individual stock performance has now reached extreme levels. Data shows that the gap between the low volatility of major indices and the sharp swings in individual stocks and sectors has widened to the highest level since the worst period of the dot-com bubble burst in 2000. The continued weakening of the S&P 500 Equal Weight Index further highlights this trend. Because the traditional S&P 500 assigns weights based on market capitalization, gains in a few mega-cap tech stocks can provide strong support for the index; the equal-weight index reduces the influence of tech giants and better reflects the overall performance of ordinary constituent stocks. Therefore, although major indices such as the S&P 500 and Nasdaq 100 have not yet signaled an obvious broad-based selloff, market breadth continues to deteriorate. If the S&P 500 Equal Weight Index ultimately records seven consecutive weeks of declines this week, it would be the third time in history after 2002 and 2022, further underscoring the current notable divergence in U.S. equities "stable indices, pressured internals."