The better-than-expected economic data from January has sparked a bit of a reflation trade in cyclicals in recent weeks. Despite the shift away from growth, tech is still holding up pretty well here. No one particular area of the market is asserting dominance, but the trend back towards utilities is something I talked about a few weeks ago. Any firmly hawkish messaging from Powell, which should be expected at this point, could confirm and extend the dollar rally.

Multiple higher than expected inflation readings coupled with a strong rebound in retail sales has investors thinking about the Fed again and that’s traditionally been bearish for stocks. Cyclicals are very mixed at the moment, but industrials are the one group buying into some of the reflation activity we’re seeing here. Tech has been one of 2023’s unquestioned market leaders, but it looks like the run may be starting to fizzle out.

Communication services staged a big reversal after a very strong start to 2023. Its growth sector peers had a pretty tough time last week, but tech managed to hold on nicely. Office REITs are in a tough spot, but rental rates remain high enough that REITs, in general, can still generate substantial income.