US stocks finished largely flat on Friday, except tech names which fell more than 1%. Beneath the surface a clear rotation continued out of high-flying semiconductor stocks and into more cyclical and defensive areas of the market. The equal-weight S&P 500, which gives each company the same influence regardless of size, negating the dominance of the Big Tech goliaths, climbed to a record high, suggesting the bull market is broadening rather than ending.
The recent pullback in chipmakers touched on earlier reflects some concern around the velocity of spending in this area rather than an obvious deterioration in fundamentals (yet). More broadly, the US economy remains resilient, earnings expectations continue to improve and corporate investment is holding up, but after an extraordinary rally in a very narrow cohort of stocks, investors are starting to broaden their horizons into other parts of the market, which is an encouraging sign.
- We can see the S&P 500 Equal Weighted Index making new highs in the coming months, with the main question being how far it can go.
