Major indices showed a more constructive performance, supported by slightly more favorable economic data and renewed optimism around monetary policy.

However, this positive movement coexists with a still fragile environment, where inflation, interest rates, and economic growth continue to drive market direction.

General Trends

Moderate upward momentum

Major U.S. indices posted gains during the week:

• The S&P 500 extended its recovery with moderate gains.

• The Nasdaq led the upside, driven by technology and growth.

• The Dow Jones advanced more modestly, reflecting caution in traditional sectors.

This behavior suggests improved risk appetite, although a fully established rally is still not in place.

Technology maintains leadership

The technology sector once again stood out as the main market driver:

• Strong performance in companies linked to artificial intelligence and semiconductors.

• Continued capital flows into high-growth companies.

• High sensitivity to rate expectations, but with positive momentum.

Despite the gains, elevated valuations remain a point of attention.

Energy loses momentum

The energy sector showed a more neutral dynamic:

• Oil prices stabilized without significant new upward pressure.

• Reduced inflationary pressure from energy components.

• Partial rotation of capital into growth sectors.

This contributed to a more supportive overall market environment.

Key drivers of market movement

1. More balanced economic data

Economic data released during the week showed mixed but less concerning signals:

• Inflation indicators showed some moderation, though still above target levels.

• The labor market remains solid, with no clear signs of deterioration.

This helped reduce fears of a more restrictive scenario.

2. Shift in Federal Reserve expectations

Markets began to price in a more constructive scenario:

• Expectations for rate cuts in 2026 remain in place.

• The Federal Reserve continues to follow a data-dependent approach.

• Lower perceived probability of additional rate hikes.

This shift was key to the rebound in risk assets.

3. Lower global volatility

The international environment remained relatively stable:

• No significant geopolitical escalations.

• Decline in implied market volatility.

This allowed greater focus on economic fundamentals.

4. Increased risk appetite

A clearer rotation toward growth assets was observed:

• Increased positioning in technology.

• Reduced preference for defensive sectors.

• Improvement in overall market sentiment.

Even so, positioning remains cautious.

Sector dynamics

• Technology: Main winner of the week, driven by structural growth.

• Energy: Stable, with less influence on the broader market.

• Financials: Slight rebound, supported by clearer rate expectations.

• Consumer discretionary: Gradual improvement, supported by economic stability.

• Industrials: Moderate gains, reflecting mixed growth signals.

The market’s implicit message

The market is shifting toward a more optimistic tone, while still maintaining caution.

Three key signals stand out:

• Greater willingness to take on risk.

• Moderate confidence in a controlled inflation scenario.

• Continued dependence on macroeconomic data.

The balance remains delicate, but more constructive than in previous weeks.

What could come next

In the short term, the market will focus on:

• Confirmation of inflation deceleration trends.

• New signals from the Federal Reserve regarding rate cuts.

• First-quarter earnings results, which will gain relevance.

A favorable data scenario could sustain the rally, while any inflation surprises could trigger corrections.

This week reflected a transition toward a more optimistic market, with technology leading and improved risk appetite.

However, the lack of definitive confirmation on inflation and monetary policy keeps investors in a selective stance.

The market is moving forward, but still needs validation.

The opinions in the preceding commentary are as of the date of publication and are subject to change.  Information has been obtained from third party sources we consider reliable, but we do not guarantee the facts cited are accurate or complete.  This material is not intended to be relied upon as a forecast or investment advice regarding a particular investment or the markets in general, nor is it intended to predict or depict performance of any investment. We may execute transactions in securities that may not be consistent with the report’s conclusions.  Investors should consult their financial advisor on the strategy best for them.  Past performance is no guarantee of future results. For illustrative purposes only. Does not represent an investment recommendation. For more information, please see our Social Media Disclosure.

Securities offered by Northbound Securities, LLC Member FINRA/SIPC 

Sources: Bloomberg, Reuters Energy, CNBC Markets, ISM Manufacturing Report