Weekly Market Insights: Rotation or Reset?

Good morning, investors ☕️

March opens with the market doing something it has not done cleanly in a while: rotating without collapsing.

The S&P 500 is hovering near the 6,900 area after a volatile February. Year-to-date performance tells a more nuanced story. Small caps are ahead, the Dow is modestly positive, and the Nasdaq is slightly negative. Leadership is broadening, even if headlines still orbit the same AI giants.

This week is neatly structured. ISM Manufacturing on Monday sets the tone for cyclicals. Broadcom reports midweek, offering a real-time check on demand for AI infrastructure. Friday’s February jobs report is the fulcrum. January payrolls rose by 130,000. The market now wants to know whether hiring is cooling, stabilising, or re-accelerating.

Beneath the surface, capital is drifting toward value, utilities, industrials, and energy. Not because AI is finished, but because investors are increasingly asking what earns cash today, not just what might dominate tomorrow.

PMIs at the front. Payrolls at the back. Everything in between is positioning.

Stocks showing the strongest data signals.

Interest rates are supposed to punish capital-intensive businesses. That is the rule most investors memorise early: when the cost of money rises, anything that depends on heavy upfront investment should suffer. Semiconductor manufacturing is a perfect example. New fabs cost tens of billions. Equipment is complex, specialised and expensive. Payback periods stretch across cycles.

And yet, during the tightening regime that began in 2022, several semiconductor manufacturing equipment stocks have materially outperformed some of the world’s largest software companies.

That outcome challenges a lazy assumption. Not all “tech” responds to higher rates in the same way. Some businesses depend on distant growth narratives. Others monetise bottlenecks that cannot be postponed.

Lithography, etch and deposition tools sit at the physical foundation of the AI economy. Before any model trains or any cloud workload scales, someone has to pattern the silicon. The companies that control that step convert strategic demand into backlog, pricing power and near-term cash flow.

This post examines why, in a high-rate world, the quiet machinery behind advanced chips has sometimes proved more resilient than the glamorous software layered on top.