Rotation away from mega-cap tech continued, with Value and cyclicals outperforming Growth for a third straight month as market breadth improved.
Treasury markets were range-bound in January, with the 10-year yield ending near the top of a narrow 4.13%–4.29% trading range.
Small-caps and international equities led, supported by a softer dollar, yield-curve normalization, and more attractive valuations outside U.S. mega-caps.
The Fed held rates steady and reiterated a patient, data-dependent stance; rate cuts are expected later in the year, but not imminently.
Precious metals were volatile—early strength as a macro hedge reversed sharply—highlighting the fragility of momentum trades in uncertain markets.
Market focus shifted to upcoming Fed leadership and political developments, as investors weigh potential impacts on long-term monetary policy.
Executive Summary
In January, the rotation that defined the late-year period solidified as a central market theme. While the “Magnificent Seven” and broader technology leadership faced continued profit-taking, the market showed healthy breadth with value and cyclical sectors outperforming growth for the third consecutive month. This shift reflects a deepening of the “1997 Echo” thesis, where investors are increasingly looking beyond the immediate “arms dealers” to identify broader beneficiaries of the AI build-out.
Broader Market Rotation
Broader Market Rotation
Performance Review & Outlook
Highlights
Executive Summary
In January, the rotation that defined the late-year period solidified as a central market theme. While the “Magnificent Seven” and broader technology leadership faced continued profit-taking, the market showed healthy breadth with value and cyclical sectors outperforming growth for the third consecutive month. This shift reflects a deepening of the “1997 Echo” thesis, where investors are increasingly looking beyond the immediate “arms dealers” to identify broader beneficiaries of the AI build-out.
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