The first two days of September saw the S&P 500 Index get off to a nice positive start, up 2.29% on a price-only basis. Since then though the market has declined 5.4% on a total return basis. This decline has been led by the large cap technology stocks in the index. The blue line in the below chart represents the average return of six large cap technology companies in the index, Facebook (FB), Amazon (AMZN), Apple (AAPL) Netflix (NFLX), Alphabet f/k/a Google (GOOGL) and Microsoft (MSFT).

As the above chart shows, the average return of those six stocks since September 2 is a decline of 13.8%. As a comparison, the S&P 500 Index is down 5.4%. And to compare apples to apples, the Invesco S&P 500 Equal Weight Index is down only 2.5%. The Invesco Top 50 Mega Cap ETF (XLG) is down 8.7% and those six stocks account for over 40% of the weighting in the XLG index.

The below chart highlights this September pullback by looking at the performance on a year to date basis. Even with the sharp decline of these mega cap stocks, specifically the technology positions, they continue to outperform the broader S&P 500 Index in 2020, 37.4% versus 6.2%, respectively. One question for investors is whether this rotation out of the mega cap technology stocks has more room to run.