Broad “Risk-On” Rally Lifts Stocks as Investors Embrace Buy-the-Dip Trade

U.S. equities opened the new week on a strong note, rebounding from last week’s soft finish as broad-based buying returned across most sectors. The S&P 500 rose 0.5%, the Nasdaq Composite gained 0.6%, and the Dow Jones Industrial Average outperformed with a 1.1% advance. Smaller-cap stocks also participated, with the Russell 2000 up 1.0% and the S&P MidCap 400 climbing 0.9%.

Despite volatility in several asset classes, stocks delivered a relatively smooth session. Precious metals continued to retreat from recent record highs, cryptocurrencies pulled back sharply over the weekend, and oil prices fell on signs of potential negotiations between the U.S. and Iran. Some of that weakness filtered into equities, with Robinhood Markets sliding amid crypto-related pressure and energy emerging as the weakest sector. Still, those factors failed to dominate the session, as investors broadly favored risk assets.

Economic data provided additional support. The January ISM Manufacturing Index showed a return to expansion, coming in well above expectations and reinforcing confidence in the outlook for economic and earnings growth. The report helped energize a market that was already primed for bargain-hunting following Friday’s pullback.

Growth-oriented areas responded quickly. Smaller-cap indices strengthened, high-beta stocks rallied, and semiconductor shares advanced sharply, signaling a renewed appetite for risk. Overall participation was solid, with eight of the eleven S&P 500 sectors finishing higher.

Consumer staples led the market with a 1.6% gain, extending their recent strength. Walmart and Costco provided key leadership, continuing to attract investors seeking both stability and earnings momentum.

Industrials followed closely, rising 1.3%. Caterpillar rebounded from a post-earnings decline, while airline stocks benefited from lower fuel costs. United Airlines and Delta Air Lines posted strong gains as falling oil prices improved profit expectations.

Financials rounded out the top-performing sectors, advancing 1.0%. The group was supported by rebounds in several recent earnings names, including Visa. Regional banks also drew attention after Fifth Third completed its merger with Comerica Incorporated, creating one of the country’s largest banking institutions.

Technology finished near the middle of the sector leaderboard, reflecting mixed performance among mega-cap names. Apple surged after a delayed positive response to its recent earnings, while Microsoft continued to struggle following its report. NVIDIA also declined, even as the broader chip group posted solid gains.

Mega-cap growth stocks edged higher overall, supported by strength in Amazon and Alphabet, both of which advanced ahead of their upcoming earnings reports.

On the downside, energy fell 2.0% amid declining oil prices, while utilities and real estate also posted notable losses as investors rotated away from defensive and rate-sensitive areas.

Overall, the session marked a decisive rebound from last week’s weakness. Renewed buy-the-dip interest, combined with encouraging economic data, lifted stocks in broad fashion and restored positive momentum. With another busy week of earnings ahead, markets appear to be entering the period on firmer footing and with improved risk sentiment.

Our FTinvest 11 model portfolio declined 0.40% to close at 987.66, easing slightly from its all-time high of 991.62. The dip comes after a strong stretch of record-setting sessions, reflecting normal market consolidation as February begins.

Despite the modest pullback, the portfolio remains near peak levels and continues to exhibit resilience. FTinvest 11’s long-term, value-focused strategy remains firmly in place as it navigates the early weeks of the new month.