Stocks finished the week higher, carried by a dovish pivot in rate expectations and a resilient earnings season. Small caps outpaced large caps, a classic sign that investors are warming to the rate-cut narrative.
The bond market led the way: yields fell across the curve as inflation data came in cool, lifting rate-sensitive sectors like utilities, real estate, and homebuilders. Cyclicals lagged as crude prices slipped.
Looking ahead, positioning is stretched after the run, so expect a pullback or a digestion period before the next leg. Levels from the week's range should provide the reference points.
Key takeaways
- Rate-cut expectations drove the weekly advance
- Small caps and rate-sensitive sectors led
- Positioning is stretched; expect digestion
