It was a choppy but modestly negative week for stocks. After seeing fresh all-time highs in the S&P 500 at the start of the week, Large Cap strength waned. The Nasdaq, Dow Jones, and the S&P 500 all closed lower.

Beneath the surface, however, market breadth continued to improve. The equal-weighted S&P 500 rose 1.3%, signaling a rotation away from mega-caps and toward cyclicals and value stocks.

Real Estate, Consumer Staples and Industrials were the top performers among the S&P 500 sectors. Energy and Utilities also saw solid growth as 6 out of 11 sectors climbed higher last week.
Furthermore, Small and Mid-caps also saw strong performance. The Small Cap 600 Growth Index saw the best performance as the style box added 2.2% for the week.

Last week’s economic data showed inflation holding steady. The Consumer Price Index came in at expectations with a reading of 0.3% month-over-month and a year-over-year reading of 2.7%. The delayed November Retail Sales report came in hotter than expected with a reading of 0.6% compared to the 0.4% expected. Both the Empire and Philadelphia Manufacturing Surveys also surpassed expectations showing the resilience of the economy.

This continues to be strong enough that market participants have continued to temper their expectations of future Fed Funds rate cuts. Next week’s FOMC Meeting has been widely expected to see rate hold steady at the 350-375 basis point range. Additionally, expectations for additional rate cuts continue to get pushed further out into 2026.