Market Rotation
I don't normally comment on daily market moves, but I think there's something happening here that is important to note. Market rotation tends to emerge from time to time, and I believe it is happening now.
Simply said, investors move away from assets or sectors that have performed well in the past and shift toward new ones they believe offer greater opportunity. The reasons for this may be safety focused or based on an expectation of returns.
The thing to note here is despite massive thematic trends, such as AI, other sectors will have their day when evaluations become stretched and other themes take their place in investors’ minds. It's driven by valuations.
The chart below on market rotation shows which sectors tend to do well as the economy goes through stages. See below.
Source: moomoo.com
This is not an exact map of when these sectors will thrive, but it does give you an idea that different areas of the economy tend to do well, depending on where we are in the economic cycle
We watch carefully for market rotation factors. These play a part in how we invest assets and many of the decisions we make are impacted by our views on current market rotation factors.
A recent CNBC article highlighted the daily moves of the market and touched on the theme of market rotation. Excerpts below.
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Begin Quote
“The Dow Jones Industrial average briefly touched a record as investors rotated out of technology stocks into shares more broadly linked to improvements in the economy.
The Dow Jones Industrial Average dipped 0.1%, after earlier rising as much as 0.5% to touch 49,653, a new record. The S&P 500 index fell 0.7% and the Nasdaq Composite shed 1.3% with Nvidia, Microsoft and software shares declining.
In the healthcare sector, Merck was up more than 3% after the pharmaceutical firm posted fourth-quarter earnings and revenue that topped estimates on strong demand for its cancer immunotherapy Keytruda and some of its other products. Merck was the biggest gainer in the Dow up 3.5%
Pepsi earnings were also strong, fueled by improving organic sales across its business — a fact that pushed up shares about 4%. Elsewhere, bank stocks were also in the green. JPMorgan and Wells Fargo rose 2%, while Citigroup gained about 1%.
Shares of Palantir jumped 6% after the defense tech company gave strong fourth-quarter financial results and upbeat guidance.
But most technology shares were in the red. Nvidia and Microsoft shed 2% apiece with both AI bellwethers adding to their losses for the year. Software stocks continued their 2026 rough with shares like ServiceNow and Salesforce down 7% and 5% respectively on Tuesday.”
End Quote
Source: CNBC
Note: This article quotes excerpts from a CNBC live blog. Because live blogs are updated continuously, the quoted excerpts may differ from the version available at the time of reading.
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