The Nasdaq Composite Index faced downward pressure as investors engaged in a sector rotation, moving capital out of technology stocks and into value stocks. This shift reflects a growing appetite for companies perceived to be trading below their intrinsic worth.

While the Nasdaq struggled, the Dow Jones Industrial Average continued its climb, highlighting the divergence in market performance. Investors are re-evaluating their portfolios in light of changing economic conditions and potential interest rate hikes.

Several factors are contributing to this rotation:

• Rising bond yields: Higher yields make bonds more attractive relative to growth stocks, which are often valued based on future earnings.
• Anticipation of infrastructure spending: President-elect Trump’s proposed infrastructure plan is boosting the prospects of companies in the construction and materials sectors.
• Undervalued sectors: Some investors believe that sectors like financials and industrials have been overlooked and offer better value at current prices.

The technology sector, which has been a market leader for much of the year, is now facing headwinds as investors reassess valuations and seek opportunities in other areas. This rotation could continue in the coming weeks as the market adjusts to the new political and economic landscape.