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Rotation break | A weeklong decline in megacap tech stocks broadened to encompass smaller firms and financial shares as signs of economic weakness overwhelmed optimism over anticipated rate cuts. Almost every major group in the S&P 500 fell, with the benchmark down almost 1%. Conviction the Federal Reserve is poised to ease back on its battle to subdue inflation has prompted a retreat from megacap stocks, which emerged during the tightening cycle as a de-facto safety trade. In turn, money recently flowed to a broader swath of industrial and staples firms for which high financing costs posed a bigger impediment. The Russell 2000 fell about 2% after recently hitting its most-overbought level since 2017. Treasury 10-year yields rose four basis points to 4.20%. The euro dropped.
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