WEEK IN PERSPECTIVE: Week ending January 16, 2025

Equities saw a choppy and mildly negative week as early S&P 500 record highs faded. Profit‑taking in mega‑caps and a lack of new catalysts pressured the major indexes, though underlying market breadth continued to improve.

Index Performance:

• Russell 2000: +2.0%

• S&P Mid Cap 400: +1.3%

• DJIA: -0.3%

• S&P 500: -0.4%

• Nasdaq Composite: -0.7%

Key Themes:

• Rotation Beneath the Surface:

  • Mega‑caps dragged on the indexes, while small- and mid‑caps outperformed.

  • The S&P 500 Equal Weight Index rose 1.3%, signaling broader participation.

• Mega‑Cap Weakness:

  • Investors trimmed exposure amid sticky inflation and uncertainty around Fed easing.

  • Vanguard Mega Cap Growth ETF: -1.5%.

• Semiconductors Outperform:

• Strong TSMC earnings and capex guidance lifted chipmakers.

• PHLX Semiconductor Index: +3.8%.

Sector Performance:

• Leaders: Real Estate (+4.1%), Consumer Staples (+3.7%), Industrials (+3.0%), Energy (+2.4%), Utilities (+2.1%).

• Laggards: Consumer Discretionary (-2.0%), Financials (-2.3%), Communication Services (-1.5%), Health Care (-1.1%).

Macro & Earnings:

• Inflation: CPI and PPI met expectations but offered no downside surprise, reinforcing a “higher for longer” Fed stance.

• Economic Data: Retail sales and manufacturing remained resilient, supporting cyclical strength.

• Earnings: Early bank results were mixed; later reports helped stabilize the financials sector.

Takeaway: Index‑level performance masked meaningful internal rotation. Breadth broadened, small- and mid‑caps led, and cyclicals attracted steady inflows. The coming week hinges on whether earnings momentum and economic data can re‑energize index‑level gains or further entrench the ongoing rotation.

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