Tech Falls As Rotation Speeds Up – US Market Wrap
A weeklong rotation that has seen investors move out of richly valued technology shares and into more economically sensitive sectors gathered pace, pushing the Nasdaq 100 to its steepest decline in a month while lifting the majority of companies in the S&P 500.
While the US equity benchmark recorded its first back-to-back losses of 2026 amid declines across all Magnificent Seven stocks, more than 300 of its constituents actually advanced. Small caps continued to outperform, with the Russell 2000 beating the S&P 500 for a ninth consecutive session, matching the longest such streak since 1990.
The opening weeks of the year have been marked by a steady shift away from mega-cap technology companies, whose resilient earnings had made them safe havens during periods of economic uncertainty, and toward a broader group of firms positioned to benefit from improving growth prospects. The heavy weighting of tech stocks in major benchmarks has at times meant their declines overshadow broader market strength.
As earnings reports came in, Wells Fargo fell after missing profit estimates, while concerns about Bank of America’s expense outlook overshadowed otherwise solid results. Citi slipped after senior executives tempered analyst enthusiasm over the bank’s progress on meeting key regulatory requirements and cutting costs.
Treasuries remained higher after a batch of economic data was seen as insufficient to warrant a change in expectations for monetary policy. Money markets continued to price the next Federal Reserve rate cut for mid-2026.
Meanwhile, the US Supreme Court did not rule on challenges to Trump’s tariffs on Wednesday, leaving markets waiting until at least next week for clarity on the future of the policy.
