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Expand chart
Data: FactSet; Chart: Axios Visuals

Investors holding the ultra-popular Nasdaq 100 and S&P 500 index funds have been hard hit over the last two weeks as tech shares have been roiled by rising U.S. Treasury yields.

Why it matters: Even though the economy is growing and many U.S. stocks are performing well, most investors are seeing their wealth decline because major indexes no longer reflect the overall economy or even a broad swath of public companies — they reflect the performance of a few of the country's biggest companies.

  • That was all fine and good when Big Tech shares were booming higher, pushing their valuations to absurd levels, but the sea change in markets since the beginning of February has reversed that trend.

What we're hearing: “While the S&P 500 may be facing structural headwinds due to tech weakness, much of the rest of the market is actually doing quite well,” Tom Essaye, founder of Sevens Research, said in his daily Sevens Report.

  • “Overall, most non-tech stocks are weathering the increase in bond yields quite well.”
  • Essaye points out that while growth sectors like tech are barely positive for the year after a rough couple of weeks, value stocks and the S&P equal weight index (which gives all companies in the S&P 500 equal weighting rather than weighting them by their market capitalization) have delivered returns about double the S&P 500's.

By the numbers: Five companies — Microsoft, Apple, Amazon, Alphabet and Facebook — make up almost 25% of the market cap for the S&P 500, the U.S. benchmark index, and as more investors move toward passive investing, a greater share of their money is following these companies.

  • As of December 2019, $4.6 trillion was indexed to the S&P 500, according to data from S&P Global, and $6.6 trillion was benchmarked to the index.
  • Passive investing accounted for more than 60% of equity assets in December 2019 — with the majority linked to the S&P — and passive investing has grown since then.

The bottom line: Rising bond yields may not be bad for the economy or the stock market overall, but they have certainly been bad for the average Americans' stock holdings and retirement accounts.

Go deeper

Dion Rabouin, author of Markets
Mar 3, 2021 - Economy & Business

The Fed could be firing up economic stimulus in disguise

Federal Reserve governor Lael Brainard at a "Fed Listens" event. Photo: Eric Baradat / AFP via Getty Images.

Even as global growth expectations increase and governments pile on fiscal spending measures central bankers are quietly restarting recession-era bond-buying programs.

Driving the news: Comments Tuesday from Fed governor Lael Brainard suggest the Fed may be jumping onboard the global monetary policy rethink and restarting a program used following the 2008 global financial crisis.

Tina Reed, author of Vitals
7 mins ago - Health

Overturning Roe could strain abortion access even in blue states

The Supreme Court is reflected in a woman's sunglasses during a march Oct. 2. Photo: Andrew Caballero-Reynolds/AFP via Getty Images

If the Supreme Court overturns Roe v. Wade, abortions could be harder to access even in states where they remain legal, because those clinics could be flooded with patients from states that have cracked down.

The big picture: This has happened before, and clinics fear the crush of demand would be a major problem in the immediate wake of a decision that would allow states to ban abortion.

A critical race theory founder says he's being inundated with threats

Richard Delgado. Photo: Courtesy of Richard Delgado

Richard Delgado, one of the founders of the critical race theory movement, tells Axios he and his wife have been receiving a steady stream of threatening messages since the coordinated, conservative campaign against critical race theory began.

Why it matters: Educators across the country — even some elementary school teachers — have faced harassment and threats over the past year over lesson plans that teach about system racism in the U.S.