Last week's market moves looked less like the smooth, coordinated waltz analysts had predicted and more like an awkward high school dance—with some sectors huddled confidently in the spotlight while others lingered by the punch bowl, hoping someone might notice them.
The week ending June 20, 2025 painted about as stark a picture as you'll ever see in sector performance. I've been tracking these weekly sector shifts since the pandemic, and rarely have I seen such a clean split between winners and losers.
Tech and Communication Services stocks? Absolutely crushing it. Energy and Materials? Getting crushed. And there wasn't much middle ground to speak of.
So Much for That Rotation, Huh?
For what feels like forever (or at least since last fall), market strategists have been predicting "the great rotation"—that magical moment when investors would finally tire of their expensive tech stocks and embrace the unsexy-but-undervalued corners of the market.
Well... that's not happening. At least not yet.
What we're seeing instead looks more like a barbell strategy playing out in real time. On one end, investors are piling into innovation-driven growth stocks—your tech darlings and communication giants. On the other end, they're seeking shelter in traditionally defensive sectors like Consumer Staples and Utilities.
This isn't a rotation so much as a bifurcation. The market seems to be saying: "Give me secular growth or give me safety—and forget everything in between."
The Rate Cut Conundrum
Here's where things get weird (and kinda fascinating, if you're a market nerd like me). After the Fed practically promised two more rate cuts before year-end, you'd expect interest-rate sensitive sectors to be doing victory laps around the trading floor.
Instead? Financials barely registered a pulse. And Real Estate—which typically responds to rate cut signals like a caffeine addict to a fresh pot of coffee—showed surprisingly little enthusiasm.
I chatted with several portfolio managers last week who confirmed my suspicion: Investors aren't entirely buying the economic soft landing narrative. They're playing defense (hello, Utilities and Staples) while keeping exposure to companies they believe can grow regardless of whether the broader economy cooperates.
Look, it's essentially "selective economic optimism"—where investors want it both ways. They're not predicting disaster, but they're not betting on robust growth either. So they're sticking with companies that either don't need economic strength or are creating their own momentum.
Size Matters (A Lot)
One thing to remember when looking at these sector charts—they're market-cap weighted, which means the big boys have an outsized impact. Tech's impressive showing isn't about uniform strength across hundreds of companies; it's about a handful of massive players dragging everything else up with them.
Tech now represents nearly 30% of the S&P 500's total market cap. Thirty percent! That concentration would have seemed absurd a decade ago, but now it's just... Tuesday.
If Sectors Could Talk
If last week's sector performance could speak, here's what we'd hear:
Tech & Communication Services: "Economic uncertainty? That's for the little people."
Consumer Staples & Utilities: "Sure, we're boring. But have you seen those geopolitical headlines lately? Boring looks pretty good right now, doesn't it?"
Financials & Real Estate: "Wait, weren't rate cuts supposed to be our thing? Is this mic on?"
Energy & Materials: "We're just over here pricing in a global slowdown that apparently nobody else believes is coming. No big deal."
Summer Reading
As we drift deeper into summer (and beach reading season), this sectoral divergence is worth keeping an eye on. History suggests these extreme divergences eventually mean-revert—either laggards catch up or leaders fall back to earth.
What strikes me most is that the market isn't showing indiscriminate risk-on or risk-off behavior. It's making calculated choices about which risks it wants to embrace and which it wants to avoid. That's actually... kind of healthy? The market is discriminating, even if some of those discriminations might look puzzling through traditional economic lenses.
For investors, neither broad economic optimism nor pessimism seems to be the right framework. The market's picking its spots carefully, rewarding companies with secular growth stories or defensive characteristics while punishing those tied too closely to the economic cycle.
In other words, the market isn't scared—it's just gotten incredibly picky about where it spends its money. And in a world of stretched valuations and mixed economic signals, that selectivity might be exactly what we should expect.
Market side notes: - Nasdaq's Bitcoin ETF approval process has entered its final phase, sending crypto-related stocks on a rollercoaster that's left even experienced traders reaching for Dramamine. - The dollar hit a three-month low against a basket of currencies, which currency traders described as "interesting"—which in finance-speak is roughly equivalent to a doctor saying "hmm" while reviewing your test results. - Three regional bank CEOs announced their retirement within the same week, which is either an extraordinary coincidence or the most heavy-handed succession planning I've ever witnessed in two decades of financial journalism.
