The weight of the Magnificent 7 is getting heavier on Wall Street, and this week could be the moment it finally buckles.
This week, four of the biggest names in the group are reporting earnings, right when investors are already questioning how long this narrow group of tech giants can keep pulling the entire U.S. market forward.
According to Reuters, the S&P 500’s performance has become so lopsided, it’s now starting to look more like a tracker for those seven companies than a true picture of the U.S. economy.
Since the start of 2023, the S&P 500 composite index, which leans heavily on large-cap companies, has gained 67%. That’s more than double the 32% rise seen in the equal-weight version of the index, which treats every company the same regardless of size.
Two years ago, the ratio of the two indexes sat at 0.66, meaning the cap-weighted index was worth roughly two-thirds of the equal-weighted one. Now that ratio is up to 0.84, the highest it’s been since 2003. That jump tells you one thing: the biggest companies are taking up more space than ever before.
Big Tech earnings hold the market hostage
The reason for this imbalance lies in the earnings. Larry Adam, Chief Investment Officer at Raymond James, said forward earnings for the S&P 500 are now 14% higher than for the equal-weight index. Tajinder Dhillon, a senior research analyst at LSEG, added that last year, the Magnificent 7 were responsible for 52% of all earnings growth across the entire market.
That kind of dominance has its risks. Traders don’t like how dependent the entire market has become on so few names. One slip from any of them could hit portfolios across the board. Dhillon said, “It’s unhealthy when the market’s fate is tied to a small group. If one of them tanks, everyone feels it.” There’s also less reason to pay attention to anything outside of big tech. If Nvidia moves, the market moves. That’s killing incentive to diversify and pushing smaller stocks to the side.
Donald Trump had sealed a trade agreement with the European Union that puts 15% tariffs on most European goods coming into the U.S., including automobiles on Sunday. Then on Monday, he said the baseline global tariff will sit somewhere between 15% and 20%. That’s rattled some investors, though many seemed to brush it off during Monday’s trading.
But the week’s not over. The tariff deadline hits on Friday, and traders are watching closely to see if more deals—especially with China—will be announced. Top U.S. and Chinese officials met in Stockholm on Monday for another round of talks, trying to lock in new terms before time runs out.
Despite those concerns, stock futures climbed slightly on Monday. S&P 500 futures rose by 0.15%, Nasdaq 100 futures increased 0.24%, and Dow Jones Industrial Average futures added 60 points. But the gains were nothing impressive.
The S&P 500 and Nasdaq Composite both hit new records, yet the rally lacked any real push. It was the 15th record close of 2025 for the S&P 500, but it only finished slightly above break-even. The Dow Jones slipped 0.1%, while the Nasdaq moved up just 0.3%.
Other sectors and global indices try to catch up
Away from the megacaps, there are signs of life in the rest of the market. Sectors like financials and industrials have started showing solid performance. But their momentum still gets buried beneath the oversized influence of the Magnificent 7 .
Outside the U.S., stock indexes without heavy tech exposure are also gaining. Britain’s FTSE 100 and Germany’s DAX are both climbing toward new highs, proving that tech isn’t the only engine available.
Whether this is the start of true market broadening or just a temporary blip depends on what these earnings reports reveal. If the big names come in strong, dominance continues. If they miss, the market might finally give smaller sectors some breathing room.
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