Definition
A cap-weighted index gives bigger companies more influence. An equal-weight version gives every company the same share.
The story
In the regular S&P 500, a giant like Nvidia moves the index far more than a small member does. In the S&P 500 Equal Weight Index, each company is reset to the same weight, about 0.2%, every quarter. When the regular index beats the equal-weight one, the biggest companies are doing the heavy lifting.
Why markets watch it
Comparing the two is a quick way to see whether a rally is broad or narrow.
Connects to
We explain why it moves markets. What you do with it is your call. Commentary and education only. Not financial advice. All terms