Healthcare and Staples Hold the Line Against Tech. The Time to Be Fearful When Others Are Greedy Has Arrived. Trey Thoelcke Fri, November 6, 2026 at 8:02 AM EST 5 min read ^GSPC -4.36% GOOG -0.12% SPY +0.19% XLK +2.23% XLP -1.95% Explore stocks on Coinbase Trading disclosure Trading disclosure The above button links to Coinbase. Yahoo Finance is not a broker-dealer or investment adviser and does not offer securities or cryptocurrencies for sale or facilitate trading. Coinbase pays us for certain activity generated through this link. Prices displayed are informational.
Jim Cramer calls megacap tech "millstones around investors," and healthcare and staples funds now lead tech over the past year.
In the dot-com bust, tech funds plunged 82% while healthcare lost 18% and staples just 2%, showing how defensive sectors cushion rotations.
Tech's heavy weight in S&P 500 index funds amplifies losses in unwinds, so near-retirees should review sector concentration against their time horizons.
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Megacap technology carried Wall Street for years, but one prominent CNBC voice now argues those leaders have turned into dead weight. On the November 3, 2026, episode of Mad Money, Jim Cramer said, "For the last few years we've been conditioned to think that tech will be led by an Alphabet or an Amazon, Nvidia, a Meta, a Microsoft. But those have almost been millstones around investors." He went on to call life sciences suppliers "the new techs, the ones that seem to be replacing the data center as the theme." However, one commentator's view is only a hypothesis. The clearest test of what happens when a dominant theme cracks dates to the dot-com peak, when the tech-heavy Nasdaq Composite collapsed.
From March 24, 2000, through October 9, 2002, the State Street Technology Select Sector SPDR ETF (NYSEARCA:XLK) tumbled from a $31.99 close to $5.79, a decline of 81.9%. The SPDR S&P 500 ETF Trust (NYSEARCA:SPY), which tracks the benchmark S&P 500, fell from $153.56 to $78.10, wiping out 49.1%.
Defensive funds took far less damage. The State Street Health Care Select Sector SPDR ETF (NYSEARCA:XLV) fell from $31.02 to $25.51, a 17.7% loss. The State Street Consumer Staples Select Sector SPDR ETF (NYSEARCA:XLP) slipped from $20.58 to $20.12, giving up only 2.2%. These historical figures reflect daily closing prices without dividend adjustment, so they should be read as price-only returns.
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Steady demand explains that gap. Households keep filling prescriptions, buying groceries, and restocking detergent whether the market rallies or tanks, so revenue at drugmakers and consumer brands held steady while tech spending fell. Both defensive funds still finished lower, yet their losses were only a fraction of the broad market's.
The dot-com collapse was a bubble bursting from extreme valuations, with many companies priced on promises rather than profits. The example shows how leadership rotation tends to play out once a theme loses momentum; it offers no evidence that a crash of that scale is coming.
Concentration is where the echo grows strongest. XLK reported $123.9 billion in net assets in its most recent SEC portfolio filing, with its three largest positions accounting for 14.7%, 12.9%, and 8.4% of the fund as of June 30, 2026. Even SPY leaned heavily on the same names, with its top three holdings weighing in at 7.6%, 6.7%, and 4.9% as of March 17, 2026.
The rotation already shows up in fund returns. Current prices reflect delayed premarket quotes from before Friday's open, with Thursday's settled close shown alongside. The sector funds report adjusted returns, while SPY's figures are unadjusted.
XLK lost 12.0% in a single week, even after a premarket bounce of 2.3%. Healthcare and staples rallied over the same month and now lead tech on a year-to-date and one-year basis. Tech still beats SPY year to date, so the shift has knocked tech from the top of the leaderboard without yet pushing it below the market. This rotation has been building for months, a trend we covered earlier this year.
Investors at or near retirement who own a plain S&P 500 index fund carry more tech exposure than the label suggests, because cap weighting automatically rewards whatever has rallied hardest. During the 2000 to 2002 unwind, that same mechanism increased losses as the biggest weights shrank fastest. Healthcare and staples acted as shock buffers, a role they also played when 2022 rattled the S&P 500. For someone drawing income soon, a deep drawdown early in retirement can do lasting harm. (A bad market in year one hurts far more than one in year 15, which is the whole subject of our free guide on defending the first five years of retirement.) Sector concentration deserves a fresh review against personal time horizons.
The long view still matters. XLK delivered 679.5% over the past decade versus 245.0% for SPY.
The pattern is rhyming. Leadership has moved toward defensive sectors in a way that mirrors the early stages of the post-2000 rotation, while the profitability of today's tech leaders argues against a repeat of an 81.9% collapse. One trigger will settle the question: if XLV and XLP keep outperforming XLK through the next quarter, the rotation becomes a durable regime change. If XLK recovers the lead by then, Cramer's "millstones" call will look like a brief sentiment shift.
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