The week on the markets passed calmly, without sharp moves or panic sentiment. Formally, indices closed with minor losses, but in essence nothing dramatic happened. The US market remains just a step away from historical highs, and the current movement looks more like a pause than the beginning of a full-fledged correction.
The Nasdaq lost about 0.7% for the week, the S&P 500 fell by 0.4%, and the Dow Jones by roughly 0.3%. Against this backdrop, the Russell 2000, the small-cap index, stood out, rising about 2% and reaching a record high. This is an important signal. Money continues to flow from mega-caps into small caps and cyclical sectors. Investors are not leaving the market; they are simply shifting the balance of forces.
Looking at the sector picture, the market was extremely selective. Semiconductors and everything related to AI performed best. Micron, Broadcom, TSMC looked confident and confirmed that the topic of computing power and AI infrastructure remains a priority.
The industrial sector also performed well, including aerospace and next-generation energy. GE and GE Vernova shares were among the leaders. Demand for metals and mining companies also remained, which fits the overall logic of a cyclical shift.
On the opposite side were software companies. Significant sell-offs occurred here, especially in names like Atlassian and AppLovin. The software ETF fell more than 6% for the week. This is further confirmation that the market is not buying everything indiscriminately, as often happens in late stages of euphoria. Investors are buying specific ideas and specific stories, not just growth.
The macro backdrop also played a role. The yield on 10-year US Treasuries rose to 4.23%, the highest level since September. Rising yields traditionally pressure the growth sector and companies with high future profit valuations, primarily software. However, it is important that the overall upward trend of indices remains intact. The pressure exists, but it is controlled.
Now, regarding next week. On Monday, the market is closed due to MLK Day, so the week will effectively be shorter. The key event will be Friday, when Core PCE data will be released — the main inflation measure that the Fed monitors. It will largely determine rate expectations and investor sentiment for the coming weeks.
Simultaneously, a busy block of corporate reports begins. Special attention will be paid to Netflix as an indicator of the consumer sector and subscription service demand. Reports will also be released by GE, Intel, Johnson & Johnson, Interactive Brokers, and Charles Schwab. The combination of inflation data and corporate results will set the market tone more strongly than any headline news.
Overall, the picture remains constructive. The upward trend continues, the correction looks shallow and mostly technical. At the same time, it is important to remember that many stocks are already noticeably overheated, and blindly entering “the market” now is not the best idea. Targeted entries, breakouts, and a clear understanding of where you are taking risk work best. Reports can sharply change the dynamics of individual stocks, and this should be considered in advance.
In short, the market is not falling. It is simply catching its breath before inflation and a series of important reports. The old rule works flawlessly here: patience is now more valuable than haste.
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