Is the S&P 500 No Longer the Economy? DataTrek’s Nick Colas Weighs In

DataTrek co-founder Nick Colas says tech and large tech now account for about 50% of the S&P 500. He argues that makes the index a weaker proxy for the financial system than it has ever been.

Colas spoke on CNBC’s Closing Bell Overtime on Thursday, as the 10-year Treasury yield slipped under 5%. The drop reads as aid to some and as an indication of slowing development to others.

Why Are Yields Ignoring Oil, According to Nick Colas?

Colas stated oil and bond yields moved collectively for roughly 10 years. However, he stated that hyperlink broke in mid-September, as oil fell and yields stored climbing.

Instead, he ties the strikes to AI. He says expectations of much less AI funding are easing actual charges, that means yields adjusted for inflation.

Meanwhile, buyers are additionally weighing a potential AI spending slowdown.

Separately, he stated the Ok-shaped financial system, the place greater earners thrive whereas others lag, nonetheless holds. He stated withdrawn preliminary public choices (IPOs) might skinny the ranks of the rich at the high of the Ok.

Is Tech’s Grip on the Index Permanent?

Colas credited Moore’s regulation, the remark that chip functionality rises steadily whereas prices maintain, for the shift.

By his rely, tech’s share now tops each oil’s roughly 28% in 1980 and tech’s 30% to 32% in 2000.

On whether or not the market will broaden, Colas named one situation.

“till another trade can double in energy each two years for each greenback.”

Nick Colas, talking on CNBC

In distinction, Apollo chief economist Torsten Slok has argued that the Nineteen Nineties tech bubble was smaller than immediately’s AI bubble. He made that case in a September 2025 chart e book.

How Is DataTrek Telling Clients to Hedge Concentration?

Colas stated DataTrek advises nervous purchasers to have a look at the equal-weight S&P 500. That method provides each firm the identical share of the index.

The Invesco S&P 500 Equal Weight ETF (RSP) holds about 16% tech, he famous.

He additionally likes homebuilders, which he stated have lagged since 2025. Mortgage aid would assist the group, he added.

If Colas is correct, the index most buyers monitor will maintain reflecting chip economics greater than the broader financial system. That cut up sits at the heart of the AI bubble debate, the place one camp sees construction and one other sees extra.

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