This is what the big rotation on the US stock market looks like
The U.S. stock market is showing a clear shift in momentum as tech stocks stall and other sectors surge ahead. While the S&P Technology Index has remained flat since November, transportation, banking, and small businesses have seen sharp gains. This change comes as inflation eases and economic growth picks up speed.
Over the past four weeks, the S&P Transportation and S&P Financials indices, along with the Russell 2000 small-cap index, have all climbed by double digits. Meanwhile, tech giants like Nvidia, Apple, Microsoft, and Alphabet now trade at high price-to-earnings ratios, far above those of traditional industries. The Federal Reserve Bank of Atlanta expects annualised economic growth to exceed 3 percent in the third quarter, adding to investor optimism.
Inflation dropped to 2.7 percent year-over-year in November, raising hopes for interest rate cuts in 2026. Lower borrowing costs could particularly help small businesses, which often rely more on loans than larger corporations. The job market remains strong, with steady hiring in construction, healthcare, and other non-tech sectors. Against this backdrop, some analysts see 2026 as a potential sweet spot for investors—a growing economy, cooling inflation, and possible rate reductions. California Governor Gavin Newsom, a rising Democratic figure, could also play a role in shaping economic policy if he pursues a 2028 presidential run.
The market’s recent performance highlights a broadening recovery beyond big tech. With transportation, financials, and small-cap stocks leading gains, investors are watching for further signs of economic strength. If inflation keeps easing, the Federal Reserve may cut rates, giving another boost to sectors that have already outperformed in recent weeks.
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