Rotation Powers Market Higher Despite Tech Drag

The stock market navigated a choppy session on Tuesday, marked by weakness in mega-cap tech stocks but strong gains in small- and mid-cap names. While the technology sector faltered, a rotation into other areas of the market helped the S&P 500 edge to a fresh record close.

Equity futures were little changed ahead of the open, as investors digested a packed slate of earnings. Early trading saw pressure on the major averages, weighed down by tech underperformance and disappointing post-earnings reactions from several blue-chip companies. Lockheed Martin fell over 10% after a weak report, while General Motors and Philip Morris also dropped sharply. The tech-heavy Nasdaq Composite stayed in the red all day, closing down 0.4%, dragged lower by chip stocks after NXP Semiconductor delivered a solid quarter but failed to offer upbeat guidance. The PHLX Semiconductor Index ended the day down 1.8%.

Despite the tech headwinds, the broader market gained momentum as the session progressed. The S&P 500 posted a modest 0.1% gain, enough for a new record close, while the Dow Jones Industrial Average rose 0.4%. Supporting the rally were strong performances from the health care, real estate, utilities, and materials sectors—all of which logged gains over 1%. Health care led the way, with IQVIA surging nearly 18% on upbeat earnings and guidance. CRO peer Medpace, though not in the S&P 500, rocketed more than 50% after its own blowout results.

One of the day’s most notable trends was the leadership of smaller-cap names. The Russell 2000 climbed 1.0%, and the S&P MidCap 400 rose 1.4%, both outperforming their large-cap peers. The equal-weighted S&P 500 advanced 1.3%, well ahead of the 0.1% gain in the market-cap-weighted index, highlighting the broadening nature of the rally.

Homebuilder stocks were another standout. D.R. Horton jumped nearly 17%, and PulteGroup rallied more than 11% after both companies delivered strong results despite the drag of high mortgage rates. Investors bet that if housing companies can perform this well in a tough rate environment, they may do even better when borrowing costs eventually ease. The iShares U.S. Home Construction ETF soared 7.9% on the day.

While the Vanguard Mega Cap Growth ETF closed down 0.6%, reflecting tech-sector weakness, the broader market remained resilient. With investors showing a willingness to rotate within equities rather than exiting risk assets altogether, the bull case remains intact—especially if upcoming earnings reports continue to beat expectations.

Despite a sluggish open, the FTinvest 11 portfolio delivered a solid performance today, quickly outshining its benchmark. Within the first two hours of trading, the index surged past the 800 mark and remained above that level for most of the session.

By the closing bell, FTInvest 11 had gained 1.26%, finishing at 801.65—less than 1% below its recently set all-time high. The sharp recovery and sustained strength throughout the day reflected broad-based support and renewed investor confidence, marking a strong start to the week for the portfolio.