Big Tech’s drop helps balance S&P 500, 401(k)s

The biggest companies have less of a stranglehold on the stock market — and likely on your 401(k).

The 10 most valuable U.S. stocks now account for less than a quarter of the S&P 500, 24.4%. That’s down from 30.4% in late 2021, and it’s the lowest proportion in the rankings at the end of each month since the pandemic began reordering the economy in February 2020.

A big reason for the drop in the stock market’s top-heaviness is the dramatic fall for the Big Tech stocks that had come to dominate it. Tesla and Meta, Facebook’s parent company, have both lost more than 60% of their value over the last year, for example, and have fallen out of the S&P 500’s top 10.

In the meantime, some older-economy companies have replaced them, but at not quite as commanding proportions. Exxon Mobil, for example, has climbed back into the top 10 after surging 80% last year. A 3.3% gain helped Johnson & Johnson replace Nvidia, which lost a bit more than 50%.

All the moves mean the S&P 500 is less beholden to the moves of just a handful of stocks. And that matters because trillions of dollars in U.S. funds directly mimic the index, with trillions more benchmarking themselves against it.

A little more than a year ago, holding an S&P 500 index fund was becoming more and more like just holding a tech stock fund. In the latter half of 2021, stocks in the tech and communication services sectors, which includes Meta and other big internet companies, made up nearly 40% of the entire S&P 500. Now, they’re down to