The Dow turned positive for the week and led the charge, up 2.1% on the day. Small caps rallied hard too, with the Russell 2000 up 3%.
Nine of eleven sectors posted gains, and the semiconductor index jumped 4.6%. But even with the bounce, the S&P 500 is still on track for a weekly decline, and the Nasdaq’s down about 2% for the week.
Amazon’s the Outlier — and It’s a Big One
Amazon dropped 5% after forecasting a 50%-plus jump in capex this year — $200 billion earmarked for AI infrastructure. That’s on top of the spending spree already underway at Microsoft, Alphabet, and Meta. The market’s trying to square near-term cash burn with the promise of long-term payoff, and right now, it’s not convinced.
The “Magnificent Seven” were mixed. Alphabet fell 3%, Tesla rose 3%, and Nvidia — the last of the group yet to report — jumped 7%. Software names like CrowdStrike and Palantir rebounded after getting hammered all week, but Salesforce and ServiceNow stayed weak. The fear that AI tools could disrupt traditional software businesses hasn’t disappeared.
Rotation’s Real — Value and Cyclicals Are Getting the Bids
Money’s moving. Industrials and financials rallied, with Caterpillar up 6% and Goldman Sachs up 4%. Small and mid-caps outperformed, and the Russell 2000 is on track for its best week since late November. Defensive sectors like consumer staples and telecoms have been absorbing flows all week as traders rotate out of growth.
This isn’t just a one-day move. The AI trade — one of the biggest engines of last year’s rally — is facing a real stress test. Bitcoin’s down 50% from its October peak, and the volatility index, though lower Friday, is still elevated. Investors are pulling back from risky assets and reassessing what works.