US Equity Wrap June 2026 – Tech pulls back, breadth improves

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US Equity Wrap June 2026 – Tech pulls back, breadth improves

Equity Strategy ● North America

2 July 2026

S&P 500 retreats in June, market breadth improves

The S&P 500 declined by 1% in June, with the setback largely driven by a pullback in technology

stocks, which led the market lower. In contrast, previously lagging sectors such as healthcare

rallied as investors rotated towards more defensive areas (see details below). For the first time in

four months, the S&P 500 Equal Weight Index (SPW) outperformed the market-cap weighted

index (SPX), signalling a modest broadening in performance. This improvement in breadth

coincided with two-thirds of stocks outperforming in June, up from only 25% in the prior months.

Year-to-date, the equal-weighted and market-cap weighted indices have delivered similar

overall performance, but we would still characterise the rally as narrowly concentrated. More

than 87% of the S&P 500’s year-to-date return has been driven by semiconductors and

technology hardware, while capital goods—particularly stocks linked to AI-related capex—

contributed c15%. Contributions from other sectors have been marginal, despite a solid

earnings backdrop during Q1 reporting season.

Market breadth improves in June as Semis, tech hardware, and cap goods

investors rotate out of tech primarily driving SPX YTD

70% Contribution to YTD market cap change in SPX (%)

60% 10

50% 8

40%

30% 2

20%

-2

Jan-18 Jan-20 Jan-22 Jan-24 Jan-26

Cap Goods Semis % of companies outperforming S&P 500 (monthly)

Others Tech H/w&Eq

Long term average

Source: LSEG Datastream, HSBC Source: FactSet, HSBC

Tech witnesses a pullback in June but fundamental keep improving

After a couple of months of strong gains in April and May, US technology gave back some

ground in June, falling by c3%.