There's a bigger worry than energy stocks

Published Tue, Feb 9 20164:35 PM EST

There's no doubt that one of the biggest drivers of current market action is oil. The continued volatility in "black gold" has led to steep price declines in many of the stocks that rely on it, or products made from it. However, as bad as it's been for the energy sector, weakness in two other places in the markets is grabbing more attention ... technology and financials. It may seem obvious to many, but it's worth repeating why these two parts of the stock market are so much more important than others. They represent the two biggest sectors in the large-cap S & P 500 index. According to S & P Dow Jones Indices, as of the end of January 2016, technology stocks carried a 20.7 percent weighting in the overall index, and financials carried a 15.9 percent weighting. That means the combination of tech and financials accounts for nearly 37 percent of the overall S & P 500. Compare that with the 6.6 percent weighing that energy carries. Read More How to trade the tech sell-off Many of the stocks in the S & P 500 underperformed the overall index in 2015, but stellar performances from the likes of mega-cap technology stocks like social media juggernaut Facebook , Google parent company Alphabet and software giant Microsoft pulled heavy duty in keeping stocks afloat. The troubling part for traders, however, is the recent weakness in some of these market leaders. After reaching a record high of $117.59 on Feb. 2, Facebook shares had fallen by around 15 percent through the close of trading on Feb. 8. A similar story played out with Alphabet, whose Class A shares dropped by 13 percent in that same period. And that's just the tech part of the story. If you factor in worries about banks on both sides of the Atlantic, the story gets even worse. The financial sector is currently the worst-performing sector in the S & P 500 year to date, due in part to large declines in some of America's biggest names in banking. Shares of Citigroup , Morgan Stanley and Bank of America , for example, are down by around 27 percent on that basis. And it's not just the big money center and investment banks. Larger regional bank stocks like Fifth Third Bancorp and Comerica have taken hits as well, as investors grapple with how the institutions will deal with the Fed interest rate environment, the effects of oil and gas industry weakness on lending portfolios, as well as worries about global financial markets. Read More Is this the year gold stops breaking hearts? European bank investors have their own worries, as experts begin forecasting whether the Continent's biggest lenders will have to raise additional equity capital to solidify their balance sheets. The conventional wisdom is that technology and financials help lead the way in the stock market, both to the upside and downside. Part of the reasoning behind that line of thinking has to do with how much weight these two sectors carry. Given all the attention being paid to crude oil and energy stock prices, many Wall Street experts are putting a lot more emphasis on what's happening in the two biggest sectors out there. A big part of the bull thesis will not only involve stability in the oil markets, but also in technology and financial stocks as well.

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It may seem obvious to many, but it's worth repeating why these two parts of the stock market are so much more important than others. They represent the two biggest sectors in the large-cap index.