Ever have one of those weeks where the market just refuses to pick a lane?
That was Thursday in a nutshell. Big-cap tech took a breather, small caps went on an absolute tear, and two of the oldest, most “boring” sectors on the board decided it was finally their turn to shine. By the time the closing bell rang, both financials and industrials had punched fresh 52-week highs, and the Russell 2000 looked like it drank three espressos and discovered rocket fuel.
So grab your coffee — here’s everything I’m watching when the opening bell rings Friday.
The Big Picture: Rotation or Just December Madness?
Let’s be honest — 2025 has been the year of the mega-cap growth trade for so long that many of us forgot other parts of the market even existed. But something shifted hard this week.
Financials are now up a very respectable 13% year-to-date, while industrials have sprinted ahead 19%. The S&P 500, for comparison, sits at +17%. In other words, the “old economy” isn’t just keeping pace anymore — it’s starting to lead.
I’ve been doing this long enough to know that when the forgotten corners of the market suddenly wake up, it usually means one of two things: either we’re in the early stages of a proper sector rotation, or we’re getting a classic December “melt-up” where everything gets bid because portfolio managers hate finishing the year in cash.
Either way, money is moving.
Small Caps Are Having Their Moment (Finally)
The Russell 2000 stealing the show this week wasn’t exactly subtle. Up 2.7% in just four trading days, with a 5.4% gain over the past month. That’s the kind of move that makes value investors weep tears of joy.
Think about that for a second. The Nasdaq 100 is basically flat over the same monthly stretch. The magnificent growth names that carried markets for two years are taking a cigarette break while the smallest companies in the index are sprinting.
Is this the real small-cap breakout we’ve been waiting for since 2021? Too early to call it that, but the price action certainly feels different this time. Lower rates, softening inflation rhetoric, and the growing sense that the Fed might actually be done hiking — all of that creates the perfect cocktail for small companies with big debt loads and high operating leverage.
- Russell 2000: +2.7% week, +5.4% month
- Nasdaq 100: flat week, +0.6% month
- Dow: +1.5% week, +1.6% month
- S&P 500: +0.5% week, +0.8% month
When small caps lead like this, history says pay attention.
Industrials: From Laggard to Leader
I have to admit — I did not have “GE Vernova up 114% in 2025” on my bingo card back in January. But here we are.
The industrial sector’s resurgence has been one of the quieter stories of the year, but the numbers don’t lie:
- GE Vernova: +114%
- Howmet Aerospace: +80%
- GE Aerospace: +73%
Meanwhile, names like Honeywell and ADP are bringing up the rear with roughly 10% declines. That’s the kind of dispersion inside a sector that creates real opportunity for stock pickers.
The common thread? Companies tied to power generation, aerospace, and defense are absolutely crushing it. Call it the “electrify everything” trade meeting the “re-arm the world” trade. Either way, it’s working.
Financials Quietly Crushing It
While everyone was busy watching Nvidia print money, the financial sector was doing some printing of its own.
Robinhood up 230% — yes, you read that right — has been the standout story, but Goldman Sachs and Citigroup both tacking on nearly 60% isn’t exactly chopped liver.
What’s driving it? Higher-for-longer interest rates turned out to be rocket fuel for net interest margins, trading volumes have stayed elevated, and investment banking is finally showing signs of life again. Add in the crypto exposure many of these names have built (either directly or through custody businesses), and you get a sector that suddenly has multiple tailwinds instead of the headwinds everyone feared twelve months ago.
Materials Making a Move
Materials are this week’s dark horse, up 2.25% while most other sectors yawned. That’s notable because materials have been one of the worst-performing groups over the past three months, down 3.5% while everything else marched higher.
Are we seeing the first signs of a catch-up trade in the more cyclical parts of the market? Possibly. Commodities have been unusually quiet this year, but any whiff of global reflation tends to light this sector on fire.
Lululemon: Downward Dog to Warrior Pose Overnight
Sometimes the best trades come from the most unexpected places.
The CEO is stepping down at the end of January after the company’s founder publicly called for new leadership. Normally that’s the kind of news that sends a stock spiraling. Instead? Shares jumped more than 10% in after-hours trading.
When the founder who still owns a massive stake basically says “this isn’t working,” and the stock goes up on the CEO departure… that’s the market telling you it wanted change badly.
Lululemon shares are still down 56% from their January highs, so this feels less like a fundamental re-rating and more like a classic “sell the rumor, buy the news” situation. But with the stock this beaten up, any sign of a management shake-up was bound to spark a short squeeze.
Will it hold? That’s the million-dollar question for Friday morning.
Broadcom: The AI Volatility Machine
If you traded Broadcom after hours Thursday, I hope you had your heart medication handy.
The company reported better-than-expected earnings and revenue, guided higher, and the CEO literally said AI chip sales are set to double next quarter. Textbook beat-and-raise, right?
Wrong. The stock dropped as much as 5% in extended trading before bouncing around like a pinball.
Welcome to the new semiconductor reality — even perfect numbers can get punished if the market was priced for god-like perfection. Broadcom is still up 122% over the past year and 15% in just the past month, so some profit-taking was probably inevitable.
But the underlying story hasn’t changed: AI infrastructure spending is accelerating, not slowing down. These pullbacks have been buying opportunities all year.
Airlines Flying High (Yes, Really)
Remember when airline stocks were basically uninvestable? Those days feel like ancient history now.
The S&P airlines industry group hit a new all-time high Thursday, up 5% in four days and a clean 10% so far in December. Southwest, Delta, and United are all participating — this isn’t just one name carrying the group.
Lower fuel prices, strong holiday travel demand, and capacity discipline finally coming together. Who would’ve thought?
What I’m Watching Friday Morning
Putting it all together, here’s my watchlist for the opening bell:
- How Lululemon opens after that monster after-hours move
- Whether Broadcom stabilizes or we get another round of AI profit-taking
- If small caps can keep the momentum going into the weekend
- Any follow-through in airlines and the broader travel trade
- Whether materials can build on this week’s relative strength
The bottom line? The market breadth we’ve been begging for all year might finally be here. When financials, industrials, small caps, and even airlines are leading while mega-cap tech catches its breath, that’s usually a healthy sign — not a bearish one.
Of course, December has a way of making fools of us all. But right now, the price action feels constructive. And in this business, that’s usually worth betting on.
See you at the open.
