Trump Tariffs Put Another Stock Index on Track to Enter a Correction

The equal-weight S&P 500 tumbled Thursday, putting the index on track to close in a correction as U.S. stocks reeled from President Trump’s announcement of far-reaching tariffs. 

The equal-weight S&P 500 fell as much as 4.4% Thursday, its biggest intraday decline since June 2022 when inflation was running at a 40-year high. The index was down 4.1% recently and on track to close in correction territory, defined as a 10% decline from its recent high.

The equal-weight S&P 500, as its name suggests, gives equal weight to every component of the index, meaning a 1% move in the share price of the index’s smallest company has as much impact as a 1% move in the price of its largest. The standard capitalization-weighted S&P 500, on the other hand, assigns stocks an index weight that is proportionate to the company’s market value. 

The equal-weight S&P 500’s correction signals the current sell-off is broader than the declines earlier this year. The Magnificent Seven, which led the stock market’s gains throughout 2023 and 2024, entered a correction in late February as increasing economic uncertainty and moderating earnings growth compelled investors to take profits. A week later, the tech-heavy Nasdaq Composite also slipped into a correction, followed by the cap-weighted S&P 500 a week later. 

About 80% of the stocks in the S&P 500 were trading in the red on Thursday afternoon after President Trump unveiled sweeping tariffs that economists and investors worry will slow growth while raising prices for businesses and consumers.