Tech sector continues to dominate, but market expectations reset by Powell could be bad for tech. Communication services sector benefits from gains in Facebook & Alphabet, but market has become narrow. Emerging markets debt levels off, but rate cutting cycles and preference for U.S. assets could provide fuel for outperformance.

Unfortunately for the market, tech is the only sector setting new highs here. This is very reminiscent of what we saw throughout 2023 and the continued lack of market breadth suggests that 1) other sectors, such as small-caps, are demonstrating the real risks of this economy and 2) investors realize that they overdid it on rate cut hopium and are now falling back into old habits.

Staples took a step back last week amid the return to growth stocks, but I think the sector is still looking short-term positive. As long as GDP growth remains positive and the labor market remains tight, investors may be unwilling to budge on lifting credit spreads anytime in the near future. After a month-long decline, the stabilization of long-term interest rates has allowed the greenback to start moving higher again.