Mega-Caps Carry Nasdaq to Fresh Record Highs as Broader Market Pauses

The stock market followed up yesterday’s rate-cut-optimism rally with a mixed session, as strong mega-cap performances managed to push the Nasdaq Composite (+0.4%) and S&P 500 (-0.1%) to fresh record highs despite broader market weakness.

The tech-heavy Nasdaq Composite stole the spotlight, establishing a new all-time high of 22,182.34 and closing at a record 22,141.10. The S&P 500 briefly topped the 6,600 level to set its own intraday record of 6,600.21, but round-number resistance sent the index slipping back below its flatline by the close. The DJIA (-0.5%) never recovered from its morning weakness and spent the session in the red.

Sector performance was uneven, with just four groups finishing in positive territory. Utilities (+0.6%), consumer discretionary (+0.6%), information technology (+0.5%), and communication services (+0.2%) were the bright spots, buoyed by their high concentration of mega-cap names. Tesla (TSLA 395.94, +27.13, +7.36%) powered the consumer discretionary sector with an outsized move that helped mask losses in Amazon (AMZN 228.15, -1.80, -0.78%).

Tech leaders Microsoft (MSFT 509.90, +1.77%) and Apple (AAPL 234.07, +1.76%) lifted the information technology sector, though chipmakers had a quieter day, with the PHLX Semiconductor Index gaining just 0.2%. In communication services, Paramount Skydance (PSKY 18.79, +7.62%) and Warner Bros. Discovery (WBD 18.91, +16.94%) extended yesterday’s rally on news of a potential acquisition, even as Bloomberg reported that the deal could face regulatory hurdles. Alphabet (GOOG 241.28, +0.21%) and Meta Platforms (META 755.59, +0.62%) chipped in modest afternoon gains that helped the sector finish near its session highs.

Ultimately, the market’s largest components did much of the heavy lifting. The Vanguard Mega Cap Growth ETF closed up 0.6%, allowing the market-weighted S&P 500 to outperform the equal-weighted version (-0.8%).

Losses elsewhere were fairly muted, with health care (-1.1%) the only sector to fall more than 1.0%, weighed down by sharp drops in vaccine makers Moderna (MRNA -7.40%) and Pfizer (PFE -3.90%) following reports that the administration may tie COVID vaccines to 25 child deaths. The iShares Biotechnology ETF slid 2.0%, adding pressure.

Small- and mid-cap stocks also lagged after yesterday’s outsized rally on rate cut hopes, with the Russell 2000 losing 1.0% and the S&P Mid Cap 400 slipping 1.1%.

Attention now shifts to next week’s FOMC meeting, where a 25-basis-point rate cut is fully priced in. Market participants will be watching closely for the updated dot plot, SEP, and Powell’s press conference for clues on whether three total rate cuts in 2025 remain on the table.

Our FTinvest 11 model portfolio wrapped up the week on a slightly softer note, slipping 0.2% on Friday to close at 858.11. Despite today’s pullback, the index still managed to secure a weekly gain of 0.48%, marking another week in positive territory. The performance, however, lagged behind the broader market, where the S&P 500 climbed 1.59% for the week and set multiple fresh record highs. This relative underperformance highlights the more measured pace of growth within our portfolio compared to the broader equity benchmark, which benefited from renewed enthusiasm around rate-cut expectations and strong mega-cap momentum.

The week’s action saw FTinvest 11 trade mostly in line with the market early on, with a midweek push that nearly brought the index back toward its all-time highs before Friday’s softness trimmed those gains. The ability to stay firmly above the 850 mark and close the week with a gain, however, reinforces the portfolio’s resilience in a market where leadership remains heavily concentrated.

Looking ahead, the index remains within striking distance of its record levels, and another strong week could easily push FTinvest 11 back into record territory. The focus now shifts to next week’s inflation data and the September FOMC meeting, which could be decisive catalysts for market direction and potentially for our portfolio’s next breakout.