Market Recap - Broad rotation favors small caps despite mega-cap weakness

The stock market endured a choppy and ultimately modestly negative week, as early record highs in the S&P 500 gave way to a broad pullback driven by profit-taking in mega-cap stocks and a lack of follow-through catalysts.

The S&P 500 finished the week down 0.4%, the DJIA fell 0.3%, and the Nasdaq Composite declined 0.7%. While the major averages struggled to hold gains, the underlying tone of the market continued to improve, with leadership broadening meaningfully and small- and mid-cap stocks once again outperforming.

The S&P 500 briefly pushed to fresh record highs early in the week before retreating into negative territory, while the Nasdaq Composite lagged amid sustained pressure on mega-cap technology and growth names. In contrast, the S&P 500 Equal Weight Index gained 1.3%, underscoring a rotation away from index-heavy leadership and toward a wider swath of cyclical and value-oriented stocks. That dynamic was reinforced by another strong week for smaller-cap stocks, with the Russell 2000 up 2.0% and the S&P Mid Cap 400 higher by 1.3%, both of which significantly outpaced large-cap benchmarks.

Mega-cap stocks were a persistent headwind throughout the week, as investors trimmed exposure following an extended run and reassessed positioning amid sticky inflation data and a still-distant outlook for Fed easing.

Semiconductor stocks stood out as a notable exception to the broader weakness in technology. Strong earnings and upbeat capital spending guidance from Taiwan Semiconductor Manufacturing kept chipmakers firmly bid, as the information technology sector declined 0.7%.

At the sector level, defensive and cyclical areas showed relative strength. Real estate (+4.1%), consumer staples (+3.7%), industrials (+3.0%), energy (+2.4%), and utilities (+2.1%) finished the week higher, helping offset notable weakness in consumer discretionary (-2.0%), financials (-2.3%), communication services (-1.5%), and health care (-1.1%).

The week’s economic data did little to alter the macro outlook. CPI and PPI readings came in largely in line with expectations but failed to deliver a downside inflation surprise, reinforcing the view that the Federal Reserve may remain on hold for several months. Meanwhile, retail sales and manufacturing data pointed to a still-resilient economy, supporting continued strength in cyclical areas of the market.

Earnings season also got underway, with big banks delivering mixed results. While some early reports disappointed, later earnings from major financial institutions helped stabilize the financials sector and underscored generally healthy credit conditions despite policy uncertainty surrounding proposed credit card rate caps.

Overall, this was a week defined less by index-level performance and more by internal rotation. Leadership continued to broaden, small- and mid-cap stocks remained in favor, and cyclical sectors attracted steady inflows. As the market heads into the coming week, investors will be watching whether earnings momentum and upcoming economic data can reaccelerate upside participation at the index level or further entrench the ongoing rotation beneath the surface.

• Russell 2000: +2.0%
• S&P Mid Cap 400: +1.3%
• DJIA: -0.3%
• S&P 500: -0.4%
• Nasdaq Composite: -0.7%

Market Recap - Cyclical leadership anchors broad push to record highs

Stocks continued their 2026 run with a strong, broad-based advance, with the S&P 500 and DJIA setting multiple record highs throughout the week.

Early-week strength was driven by a sharp rotation into cyclical and economically sensitive areas, while mega-cap leadership reasserted itself selectively by week’s end.

The DJIA (+2.3%) led the major averages, buoyed by outsized gains in financials, industrials, and energy names, while the Nasdaq Composite (+1.9%) and S&P 500 (+1.6%) also advanced meaningfully. Smaller-cap stocks stood out, with the Russell 2000 (+4.6%) and S&P Mid Cap 400 (+3.3%) extending their early-year leadership as investors leaned into domestic growth exposure.

Sector performance reflected a clear pro-cyclical bias. The Consumer discretionary (+5.8%) and materials (+4.8%) sectors captured the widest gains, supported by strength in homebuilders, retailers, and metals-related names. The industrials sector (+2.5%) advanced amid renewed optimism around infrastructure and defense spending, while the energy sector (+2.1%) benefitted from volatility tied to developments in Venezuela and shifting expectations around global oil supply. In contrast, the utilities sector (-1.6%) finished as the lone declining sector, pressured by rising risk appetite and rotation away from defensive positioning.

Within technology, performance was more nuanced. The information technology sector finished flat, masking pronounced internal dispersion. Semiconductor stocks were a notable bright spot with renewed enthusiasm around the AI buildout, particularly in memory and chip manufacturing names. That strength contrasted with more uneven performance among mega-cap growth stocks.

Several thematic groups reinforced the week’s cyclical tilt. Economic data pointed to resilient single-family housing demand and policy developments supported mortgage markets.

Macro data helped shape the narrative without derailing risk appetite. The December employment report showed softer payroll growth but a lower unemployment rate, easing fears of an abrupt slowdown in consumer spending while reinforcing expectations that the Fed can remain patient on further rate cuts. Elsewhere, strong productivity data and firm services-sector activity underscored an economy that continues to grow without generating significant inflationary pressure.

All told, the first full trading week of 2026 reflected a market leaning into growth with increasing confidence. Leadership broadened meaningfully beyond mega-cap technology, small- and mid-cap stocks took the early lead, and cyclical sectors reasserted themselves as investors positioned for a firm economic backdrop. While upcoming inflation data and earnings season will test that optimism, the market enters the weeks ahead with momentum firmly intact.

• Russell 2000: +4.6%
• S&P Mid Cap 400: +3.3%
• DJIA: +2.3%
• Nasdaq Composite: +1.9%
• S&P 500: +1.6%

Market Recap - Stocks turn the calendar in a relatively underwhelming fashion

The stock market finished the holiday-shortened week with a generally soft tone, as low trading volume and a lack of fresh catalysts left equities drifting lower and erased much of the prior week’s advance.

The muted action resulted in a largely nonexistent Santa Claus rally, with investors still searching for a clear directional driver as the calendar turned.

The major averages reflected that sluggish backdrop. The S&P 500 (-1.0% WTD), Nasdaq Composite (-1.5% WTD), and DJIA (-0.7% WTD) all declined, weighed down by pressure in several mega-cap names. Small- and mid-cap indexes extended last week’s underperformance, with the Russell 2000 (-1.1% WTD) and S&P Mid Cap 400 (-0.7% WTD) also finishing lower.

Mega-cap weakness was a recurring theme, particularly within growth-oriented benchmarks. That pressure capped upside at the index level despite pockets of strength elsewhere.

Sector performance was mixed and rotational. Stocks in the information technology sector (-1.5% WTD) struggled overall, reflecting ongoing consolidation in large-cap AI and software names. That said, chipmakers showed improving momentum late in the week.

Consumer-facing areas were among the weakest spots, with the consumer discretionary sector (-3.2% WTD) posting the widest decline as selling pressure lingered in several heavyweight components. Financial stocks also lagged, leaving the financials sector (-1.3% WTD) lower on the week.

By contrast, energy was a clear standout. The energy sector (+3.3% WTD) finished with the strongest gain as geopolitical tensions and firm oil prices supported the group. The industrials (+0.5% WTD) and utilities (+0.9% WTD) sectors also closed higher, offering relative stability amid broader market softness.

Overall, this week’s price action came amid notably light volume due to the holiday calendar, limiting conviction behind both rallies and selloffs.

With last week’s gains largely retraced and no major macro or policy developments altering expectations, the market ended the week still in search of its next catalyst as 2026 begins.

• DJIA: -0.7% WTD

• S&P Mid Cap 400: -0.7% WTD

• S&P 500: -1.0% WTD

• Russell 2000: -1.1% WTD

• Nasdaq Composite: -1.5% WTD

Market Recap - Mixed action as late week tech rally lifts markets

Mixed action as late week tech rally lifts markets

The stock market finished the week with mixed results as investors navigated swings in mega-cap tech and AI-related names, sector rotation, and some highly anticipated data releases that had minimal impact on expectations for near-term monetary policy.

The S&P 500 (+0.1% WTD), DJIA (-0.7% WTD), and Nasdaq Composite (+0.5% WTD) reflected divergent trends across large-cap indexes, while smaller-cap benchmarks were relatively subdued: the Russell 2000 (-0.9% WTD) underperformed, and the S&P Mid Cap 400 remained flat.

Stocks in the information technology sector (+0.5% WTD) led both the volatility and the week’s headlines. Early-week weakness in Oracle and Broadcom extended their post earnings slide despite positive guidance. Micron’s blowout earnings midweek sparked a reversal in the AI trade, sending chipmakers higher and giving the sector a late boost.

Cyclical sectors showed pockets of strength amid the turbulence in tech. The consumer discretionary sector (+1.0% WTD) benefited from gains in travel, leisure, and mega-cap names such as Tesla. The energy sector (-2.9% WTD) struggled as optimism about a potential Russia Ukraine peace deal weighed on oil prices. Defensive sectors such as consumer staples (-0.9%) and utilities (-0.6%) underperformed as tech rallied later in the week. Meanwhile, the health care sector (+0.6% WTD), also defensive in nature, closed higher following news of new agreements to lower prescription drug prices, which buoyed several major pharmaceutical names.

Economic releases this week largely reinforced the narrative of a cautious labor market and steady spending, without prompting a major shift in monetary policy expectations. November payrolls beat expectations with 64,000 new jobs, though prior-month revisions highlighted weakness, and the unemployment rate ticked higher to 4.6%. Retail sales for October were largely flat, while CPI data showed a modest slowdown in year-over year inflation. Collectively, the data confirmed ongoing moderation in inflation but did little to alter the market’s near-term Fed expectations.

Overall, the week underscored the market’s sensitivity to swings in mega-cap tech and AI-related names, while sector rotation and company-specific catalysts shaped relative performance. Despite the volatility, the major averages remained near key technical levels, setting the stage for year-end positioning and continued attention on earnings, AI developments, and data releases in the coming sessions.

• Nasdaq Composite: +0.5%

• S&P 500: +0.1%

• S&P Mid Cap 400: flat

• DJIA: -0.7%

• Russell 2000: -0.9%

Market Recap - AI trade stumbles, cyclicals shine amid tech earnings and FOMC decision

The stock market closed the week with mixed results, driven by the Federal Reserve’s policy decision, commentary from Fed Chair Powell, and sharp swings in tech and AI-related stocks.

The S&P 500 (-0.6% WTD), DJIA (+1.1% WTD), and Nasdaq Composite (-1.6% WTD) reflected divergent trends across large-cap and growth-heavy indexes, while smaller-cap benchmarks continued to show relative strength: the Russell 2000 (+1.2% WTD) and S&P Mid Cap 400 (+0.9% WTD) both advanced over the week.

Investors digested a 25-basis-point rate cut from the FOMC on Wednesday, alongside a “hawkish cut” message in which the Fed signaled that additional easing would likely be gradual. Fed Chair Powell emphasized a meeting by-meeting approach, noting that the Fed funds rate is now within a broad range of estimates of its neutral value. T he combination of a rate reduction with cautious forward guidance provided a dovish tilt that supported cyclical, domestic-focused, and financial stocks.

The week’s sector performance highlighted both rotation and volatility. The cyclical financials (+2.3% WTD), materials (+2.4% WTD), and industrials (+1.4% WTD) sectors led the advance as investors responded to sectors that benefit from lower borrowing costs and improved macro projections.

The information technology (-2.3% WTD) and communication services (-3.2% WTD) sectors suffered as mega-cap AI and chip-related names retraced early week gains.

Oracle (-7.8%) and Broadcom (-12.7%) exemplified the tech weakness, retreating sharply despite beating earnings and issuing positive guidance. The AI trade selloff illustrated market sensitivity to growth expectations in its largest names.

Overall this week’s action was a sharp contrast to the sideways drift that preceded the December FOMC meeting. The immediate reaction to that rate cut, and optimistic outlook from the Fed helped push the DJIA to record highs, with the S&P 500 also notching a record closing high on Thursday.

However, sentiment-based double-digit selloffs to two prominent AI plays pushed the major averages from record highs and rekindle valuation concerns that have created choppy action across tech names in recent months.

• Russell 2000: +1.2% WTD

• DJIA: +1.1% YTD

• S&P Mid Cap 400: +0.9% WTD

• S&P 500: -0.6% WTD

• Nasdaq Composite: -1.6% WTD

Market Recap - Modest weekly gains as market awaits FOMC decision

Modest weekly gains as market awaits FOMC decision

The stock market ended the week modestly higher, with the major averages grinding upward despite uneven sector leadership and shifting rate expectations ahead of next week’s FOMC decision.

The S&P 500 gained 0.3%, the Nasdaq Composite rose 0.9%, and the DJIA added 0.5%, while small- and mid-cap stocks also participated, with the Russell 2000 up 0.8% and the S&P Mid Cap 400 up 0.4%.

Technology and growth areas helped support the broader market, highlighted by a handful of solid weekly performances from mega-cap names. High-beta stocks also outperformed, signaling a continued willingness among investors to take on risk despite pockets of weakness in defensive sectors.  

Sector leadership was mixed but tilted toward cyclical and growth-oriented areas. The Information technology and energy sectors both advanced 1.4% for the week, while the communication services (+0.8%) and consumer discretionary (+0.8%) posted more modest gains. In contrast, the health care (–2.7%), utilities (–4.5%), and consumer staples (–1.4%) sectors underperformed, extending the rotation away from defensives that has been building in recent weeks.  

The broader tone of the week reflected a market that remains generally constructive but as investors continued to position cautiously ahead of the December FOMC meeting. Rate-cut expectations for next week held steady, and equities ultimately found enough support from semiconductors, mega-caps, and improved risk appetite to deliver a modestly positive weekly finish.

• Nasdaq Composite: +0.9%
• Russell 2000: +0.8%
• DJIA: +0.5%
• S&P Mid Cap 400: +0.4%
• S&P 500: +0.3%

Major averages retreat despite NVIDIA’s earnings and rising rate-cut expectations

The stock market finished the week lower, with the S&P 500 (-2.0% WTD), Nasdaq Composite (-2.7% WTD), and DJIA (-1.9% WTD) retreating beneath their 50-day moving averages after several days of choppy trading.

Smaller-cap indexes were more resilient, with the Russell 2000 (-0.8% WTD) and S&P Mid Cap 400 (-0.7% WTD) posting relatively modest declines. Mega-cap growth lagged, reflecting continued caution among investors around the largest names.

NVIDIA faced its own selling pressure despite delivering strong earnings beat, which fostered a sharp reversal of early gains on Thursday. The stock finished the week down 2.8%. The broader information technology sector (-4.7% WTD) led losses, while consumer discretionary (-3.3% WTD) also lagged. By contrast, healthcare (+1.8% WTD), communication services (+3.0% WTD), and consumer staples (+0.8% WTD) provided pockets of strength, as investors rotated into sectors viewed as more defensive or insulated from the recent AI and mega-cap volatility.

Friday’s session offered a partial reprieve as comments from New York Fed President John Williams lifted expectations for a December rate cut. The major averages finished near session highs, and mid- and small-cap stocks outperformed, with the Russell 2000 (+2.8% Friday) and S&P Mid Cap 400 (+2.4% Friday) rebounding more sharply. Even so, the week’s results underscore that the market remains in a risk-off posture, with mega-cap and tech leadership still fragile.

Overall, the week reflected a market balancing between optimism for potential Fed easing and caution over stretched valuations and recent momentum unwind. While rate-cut chatter offered intermittent relief, broader weakness in tech and mega-cap stocks weighed on the major averages, leaving the market in a state of ongoing rotation and selective strength.

•S&P Mid Cap 400: -0.7% WTD

• Russell 2000: -0.8% WTD

• DJIA: -1.9% WTD

• S&P 500: -2.0% WTD

• Nasdaq Composite: -2.7% WTD

Market Recap - Mixed market performance amid hawkish fed signals

The stock market finished the week with mixed performance as investors navigated uneven sector leadership, mega-cap rotation, and Fed commentary that tempered December rate cut expectations.

T he DJIA (+0.3% WTD) and S&P 500 (+0.1% WTD) ended slightly higher, while the Nasdaq Composite (-0.5% WTD), Russell 2000 (-1.8% WTD), and S&P MidCap 400 (-1.2% WTD) lagged. The health care (+3.9% WTD) and energy (+2.5% WTD) sectors led gains, while the consumer discretionary (-2.7% WTD), communication services (-0.8% WTD), and utilities (-1.2% WTD) sectors underperformed.

Early-week optimism around an end to the government shutdown supported broad-market participation, with AI-related technology stocks, chipmakers, and healthcare leaders like Eli Lilly, UnitedHealth, Viatris, and Moderna driving early strength. Midweek, tech-heavy sectors struggled, though the DJIA reached a record closing above 48,000, supported by the financials (+0.1% WTD) and industrials (-0.9% WTD) sectors. The S&P 500 Equal Weighted Index highlighted rotation beyond mega-cap growth, reflecting broader participation.

Later in the week, hawkish Fed commentary from officials reduced odds of a December rate cut to coin-flip probabilities, pressuring growth-oriented and high beta names. Thursday’s broad-based weakness pushed the S&P 500 and Nasdaq Composite lower, though Friday saw a partial rebound as chipmakers and other technology stocks stabilized, helping the S&P 500 and Nasdaq reclaim technical support above their 50-day moving averages. The week reflected a market balancing selective sector rotation against caution on policy and stretched valuations.

• DJIA: +0.3% WTD

• S&P 500: +0.1% WTD

• Nasdaq Composite: -0.5% WTD

• S&P MidCap 400: -1.2% WTD

• Russell 2000: -1.8% WTD

Market Recap - A positioning and valuation week with AI/growth leadership tested.

The week was defined by profit-taking in AI-growth, better breadth beneath the surface and a defensive/value tilt.

Mega-cap weakness weighed on the cap-weighted indices, while equal-weight and value held up far better (MGK -3.1% w/w; Russell 3000 Growth -2.9% vs. Russell 3000 Value -0.1%). Semis were volatile; energy and defensives finished strong. The S&P 500, despite the struggles of the growth stocks, managed yet again to hold key support at its 50-DMA.

Macro & policy
• Manufacturing stayed in contraction: ISM Manufacturing 48.7 (8th straight <50) even as S&P Global Mfg PMI ticked up to 52.5.
• Services re-accelerated: ISM Services 52.4 with the prices-paid index at a 3-yr high—an incremental hurdle for a December rate cut.
• Labor mixed: ADP +42k after a negative prior revision; Challenger job cuts for October were the highest for any October since 2003. Week Ending 11/07/2025
• Consumers wobbled: prelim Univ. of Michigan sentiment slid to 50.3; non-revolving credit drove a $13.1B September credit gain.
• Rates were range-bound: 2-yr ~3.57–3.63%, 10 yr ~4.09–4.16%, with safe-haven bids on weak data and growth jitters.
• Trade/politics: the U.S.–China tariff framework eased the average rate by 10% with a 100% hike postponed a year; shutdown headlines ping-ponged but didn’t derail the late-week rally.

Sector & factor moves
• Leadership rotation: energy, utilities, materials, staples, and real estate outperformed late week as investors sought defensives and yield.
• Growth under pressure: info tech and consumer discretionary lagged; breadth improved mid week but leadership remained thin among mega-caps.
• Equal-weight beat cap-weight again as narrow leadership continued to unwind.

Story stocks
• Amazon: rallied on a $38B, 7-year AWS compute deal with OpenAI, reinforcing cloud/AI demand optionality and sustaining post-earnings momentum.
• NVIDIA: early strength faded; week -7.1% amid AI rotation and reports of rival chip availability; semis swung with HBM pricing chatter and export headlines.
• Palantir: sold off post-beat/raise on valuation concerns (still >200x forward P/E), catalyzing profit-taking across AI/growth.
• AMD: beat-and-raise helped stabilize semi sentiment; group still choppy.
• Micron/Seagate: bid on reports of SK Hynix aiming for 50% HBM price hikes, spotlighting tight high-bandwidth memory supply.
• Tesla: volatile; weakness weighed on discretionary; later rebound couldn’t restore weekly leadership as shareholders approved a supersized CEO pay package.
• Alphabet: bucked tech softness on reports its Ironwood AI chip will be widely available soon.
• Kimberly-Clark/Kenvue: $48.7B cash-and-stock deal drove a sharp Kimberly-Clark slide on price/leverage; Kenvue jumped on a cleaner exit path.
• Health-weight loss: headlines pointed to “most-favored nation” pricing commitments, aiding sector defensiveness.
• e.l.f., Duolingo, DoorDash, Paycom: examples of how outsized post-print drawdowns amplified valuation discipline outside megacaps.

Bottom line
This was a positioning-and-valuation week: AI/growth leadership was tested, defensives rotated in, and indices held crucial support with better (if still fragile) breadth.

• S&P Midcap 400: -0.1% for the week / +3.9% YTD
• DJIA: -1.2% for the week / +10.4% YTD
• S&P 500: -1.6% for the week / +14.4% YTD • Russell 2000: -1.9% for the week / +9.1% YTD
• Nasdaq: -3.0% for the week / +19.1% YTD

Market Recap - Mega-cap earnings and trade optimism lift markets; Powell comments temper December rate-cut bets

Stocks saw strong early-week gains on optimism around U.S.-China trade developments and mega-cap earnings, sending the major averages to record-highs for the first three days of the week, though the major averages ended the week on a mixed note.

The Nasdaq Composite (+2.2% WTD), S&P 500 (+0.7% WTD), and DJIA (+0.8% WTD) captured weekly gains, while smaller-cap indices lagged, with the Russell 2000 (-1.4% WTD) and S&P MidCap 400 (-1.6% WTD) finishing lower. Early-week momentum was fueled by a U.S.-China trade deal framework and strong tech leadership.

Earnings were a major driver of sentiment. Amazon and Alphabet posted strong results, while NVIDIA’s conference announcements, including over $500 billion in chip orders through 2026 - supported tech gains. Meta’s report midweek weighed on sentiment due to higher AI spending plans.

Sector performance reflected the mega-cap leadership as the information technology (+3.0% WTD) and consumer discretionary (+2.8%) sectors led, while the consumer staples (-3.7%), real estate (-3.9%), and utilities (-2.6%) sectors lagged.

T he FOMC went through with a widely expected 25-basis point rate cut, though Fed Chair Powell’s post-FOMC comments dampened December rate-cut expectations, pushing the probability down to roughly 65%. Nonetheless, strong earnings, a booming AI investment cycle, and trade optimism helped maintain a broadly positive tone for the week.

• Nasdaq Composite +2.2% WTD

• DJIA +0.8% WTD

• S&P 500 +0.7% WTD

• Russell 2000 -1.4% WTD

• S&P MidCap 400 -1.6% WTD