The stock market stumbled into Monday’s session on unsure footing following last week’s notable shift away from recent top performers. However, those battered down stocks showed some resiliency Monday, recovering some of the losses.

Earnings season is well underway, and this week, 25% of the S&P 500 will report their second-quarter performance, including major names like Google, Tesla, and Coca-Cola. So far, this earnings cycle has produced solid results, with an above average number of companies beating earnings expectations, albeit by a smaller margin than usual. Earnings growth for companies reporting so far has been strong, a positive indicator for upcoming reports. However, as always, the performance of a few key companies, such as Nvidia, Google, and Tesla, will likely dictate the market's trajectory, so we wait patiently for their results.

While a very backward-looking metric, investors look forward to the GDP figure to gauge the economy's health. Forecasts suggest an annualized growth rate of 1.9% for the quarter, which is below average but enough to sustain the economy’s current steady state. While the GDP report looks backward, the S&P PMIs will provide investors with current economic data, offering insights into the economy's condition and potential future performance. The PCE release is expected to have the most significant market impact, as investors hope the Fed’s preferred inflation gauge aligns with the CPI, providing the central bank with justification for potential rate cuts later this year.

The last few days have shown one of the more drastic short-term rotations from our Newton Model in some time. Across the board, we see a broadening out and rotation in the equity market as mid and small-cap stocks have made a resurgence while the large-cap winners have dropped. This rotation is also seen in sectors that have been underappreciated, such as Financials, Real Estate, and Industrials. Before confirming a new trend, we will need to see sustained follow-through on this rotation.