S&P 500 sector-wide performance

What happened: More than half of the S&P 500's sectors are in correction territory, with the index itself approaching this level. Meanwhile, the Dow Jones Industrial Average (DJIA) has outperformed the S&P 500 and Nasdaq Composite, benefiting from strong breadth. The S&P 500 is on track to finish Q1 2026 in negative territory, with tech stocks lagging. Despite this, investors have reason for optimism based on historical trends. The market has broken down technically, with the S&P 500, DJIA, and Nasdaq Composite falling below their 200-day moving averages.

Market impact: This narrative affects growth-oriented sectors like technology and consumer discretionary, which have led the market's decline. Value-oriented sectors like energy and financials, heavily represented in the DJIA, have outperformed. Investors are pivoting away from megacap tech stocks, seeking opportunities in other sectors and themes. Equal-weight ETFs like Invesco S&P 500 Equal Weight ETF (RSP) could benefit from this shift, as smaller-cap stocks historically outperform during market rotations.

What to watch next: The upcoming earnings season will provide insights into companies' outlooks and help gauge the market's trajectory. Key earnings dates include Alphabet (GOOGL) on April 25 and Amazon (AMZN) on April 27. Additionally, the Federal Reserve's interest rate decision on May 3 will influence market sentiment, as investors await clarity on the central bank's monetary policy. Lastly, the market's reaction to the 200-day moving average as a potential support level will be crucial in determining the next leg of the market's movement.