The market finished lower last week as traders shifted away from higher risk assets such as high growth stocks and crypto. Prominent AI players are also struggling to attract buyers. Valuations expanded markedly over the last 24 months making new entries more difficult to justify at current prices.

Capital is rotating into energy, industrials, consumer defensive and healthcare. Investors are placing money into classic names like CocaCola, Boeing, P&G, Costco and Walmart. These companies often exhibit lower leverage and stronger free cash flow compared with recent high growth names.

Last year the market overlooked firms with little to no revenue as investors paid premiums for companies with weak balance sheets in hopes of finding the next Nvidia. The current backdrop shows greater emphasis on predictable cash flow and balance sheet strength. Uncertainty around interest rates increases the appeal of companies that can finance themselves or use cash.

Broad indexes such as the S&P 500 and Nasdaq show relative weakness while the Russell 2000 and Dow Jones have been stronger. SPY's heavy concentration in technology ties its performance closely to the largest tech companies, including Nvidia, Apple, Google and Microsoft.

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