The financials sector emerged as the standout performer for the week, with a 3.5% increase in week-to-date gains in the S&P 500. Regions Financial, Capital One Financial, and Discover Financial Services all witnessed significant upticks ranging from 8% to 3.5%. Energy also showcased strength, rising by approximately 2.9%, with Halliburton and APA leading the way with 7.2% gains each. Conversely, information technology struggled, posting a 3.3% decline due to a selloff in mega-cap tech stocks and semiconductor companies.
Small-cap stocks experienced a remarkable five-day winning streak, driving the iShares Russell 2000 ETF to achieve a historic daily overbought reading not seen before in major U.S. indices, according to Bespoke Investment Group. The small-cap benchmark surged by 3.5% on Tuesday alone, marking a fifth consecutive day of gains fueled by optimism surrounding potential interest rate cuts. This rally has been predominantly driven by investors reallocating gains from large-cap tech stocks towards cyclical sectors, bolstering small-cap stocks’ outperformance. As a result, the Russell 2000 index closed 4.4 standard deviations above its 50-day moving average, signaling an unprecedented level of extreme bullish sentiment in the sector.
