By Jacob Sonenshine

The bigger they come, the harder they fall -- and Big Tech fell hard this past week.

There was no place to hide. Microsoft fell 4%. Tesla dropped 5.3%. Broadcom slid 7.3%. Nvidia and Oracle slumped 8.9% and 10%, respectively. Palantir Technologies tumbled 13%. All of them fell despite the absence of any news that might be considered "bad."

The result was as you might expect. While the Dow Jones Industrial Average was on track to decline 1.5% and the S&P 500 was on track to fall 2.1% -- suffering their worst declines since Oct. 10 -- the Nasdaq Composite was set to drop 3.7%, its worst week since the one ended April 4, which included President Donald Trump's "Liberation Day." It was ugly.

The catalyst, if you believe the folks who always have to have a reason for the market's decline, was data from Challenger, Gray & Christmas showing that layoffs spiked in October. With the October payrolls report, which should have been released Friday, delayed, it was one of the few data points traders had to act on.

Maybe it was an excuse to take profits. Maybe investors realized that Palantir stock was too expensive at 248 times 12-month forward earnings despite what CEO Alex Karp described as "arguably the best results that any software company has ever delivered" -- it wasn't -- and maybe the same went for other tech companies.

Enter the rest of the market. The Invesco S&P 500 Equal Weight exchange-traded fund dropped just 0.8% this past week, a sign that the typical stock fared far better than the index's larger ones. That may simply be because the nontech stocks in the index have less to lose. The equal-weight version of the index has underperformed the cap-weighted one by 7.4 percentage points in 2025 and is cheaper: It trades at 16.7 times analyst's aggregate expected earnings for the coming 12 months, 26% less than the S&P 500's 22.6, a steeper discount than the 17% five-year average.

Earnings growth isn't just for tech companies anymore, either. The aggregate analyst sales growth expectation for the equal-weighted S&P 500 is 5% for 2026, according to FactSet, which should be enough to generate earnings growth of 11%, not far below the 13% for the standard index. With the economy still growing despite the government shutdown -- and odds suggesting the Federal Reserve will continue to cut interest rates, especially in the face of weak jobs data -- it should be enough to keep pushing earnings higher.

Could financial stocks be the new tech? The Financial Select Sector SPDR ETF was little changed this past week, suggesting economic worries are not at the forefront of the selling. It trades at just under 16 times earnings, a sizable discount to the overall market, while margins are expected to rise by 1.5 percentage points. There are multiple tailwinds: Banks can benefit from loan demand, more mergers and acquisitions, and higher trading revenue. Money managers can benefit from growth in assets under management. Insurers could benefit from mild job growth. They can all see higher margins as they replace some costs with artificial intelligence.

So let the tech selloff continue. It's time for everything else to shine for a while.

Write to Jacob Sonenshine at jacob.sonenshine@barrons.com

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(END) Dow Jones Newswires

November 07, 2025 21:31 ET (02:31 GMT)

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