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S&P 500 closed July unchanged while the MSCI USA Momentum ETF fell 13%, a worst month since April 2022, highlighting sector rotation and market resilience.
The S&P 500 ended July essentially unchanged, yet the benchmark’s heatmap revealed a stark contrast: the MSCI USA Momentum Factor ETF (MTUM) slumped 13%—its steepest monthly decline since April 2022—while sector spreads widened as investors rotated into non‑AI ideas and industrials【2】.
| At a glance | |
|---|---|
| S&P 500 July change | 0.0 % (flat) |
| MTUM July change | –13 % (worst since Apr 2022) |
| Caterpillar stock jump | +11 % to $925 (pre‑market) |
| 10‑yr Treasury yield | 4.69 % |
July’s flat S&P 500 performance masks a “healthy correction” in high‑momentum, AI‑linked stocks, according to UBS strategist Keith Parker, who called the divergence an “outlier” not seen since the 1990s【2】. The pull‑back in momentum names coincided with a broader reallocation toward industrials and other non‑AI sectors, exemplified by Caterpillar’s 11% pre‑market surge after beating second‑quarter earnings and raising its revenue outlook【3】. This rotation helped the broader index hold its ground despite the AI‑related sell‑off.
On June 24‑25, EquipmentShare (EQPT) shares tumbled 6.6% and then 11.7% after a research report alleged undisclosed related‑party transactions that netted the founders at least $77 million【1】. The sharp drop contributed to the “red” zones on the S&P 500 heatmap for the transportation and industrial segments, underscoring how company‑specific news can punctuate broader market trends.
The mixed picture left the 10‑year Treasury yield at 4.69 % and the two‑year at 4.26 %, while the CME FedWatch tool indicated a 62.7 % probability of a rate hike at the September meeting【3】. Oil prices fell about 3% to $77.95 per barrel after Treasury Secretary Scott Bessent hinted at a possible deal to open the Strait of Hormuz, easing geopolitical risk and supporting equities【3】.
July’s heatmap illustrates that a flat headline index can hide divergent sector dynamics—momentum stocks under pressure while industrials rally—highlighting the importance of looking beyond the headline S&P 500 number to gauge market health.
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AI-assisted synthesis by the TrendWatcher Editorial Desk · sourced from 3 outlets · Aug 4, 2026 · How we report
The index is public‑float‑adjusted capitalization weighted, meaning each component’s weight reflects its float‑adjusted market value.
Information Technology leads with 37.4% of the index, followed by Financials (12.0%) and Communication Services (9.96%).
A committee evaluates eligibility based on criteria such as market capitalization (≥ $22.7 billion), liquidity, profitability, exchange listing, and sector balance.
Since 1926, the index’s compound annual growth rate, including dividends, is approximately 9.8%, with annual gains occurring about 70% of the time.
There are index funds, ETFs (e.g., SPDR S&P 500 ETF Trust), mutual funds, and derivatives such as options and futures that aim to replicate the index’s performance.