Dow Jones futures are set to open Sunday evening, with S&P 500 and Nasdaq 100 futures following, after a volatile week that underscored the fragility of the current market backdrop. The Nasdaq Composite and S&P 500 both slipped below their 50-day moving averages, weighed down by losses in Apple, Alphabet, Amazon, Meta Platforms and Nvidia. Yet beneath the surface, broader participation remains resilient, as evidenced by the Invesco S&P 500 Equal Weight ETF reaching fresh highs. The divergence highlights a market grappling with sector rotation, artificial intelligence disruption fears and uncertain macro signals.

Megacaps Weigh, Breadth Improves

Last week’s price action was defined by choppiness and leadership fatigue among technology heavyweights. Apple dropped 8% for the week, Alphabet lost 5.3%, Amazon declined 5.5% and Meta fell 3.3%. Nvidia, though down only 1.4% for the week, slid sharply late in the period and fell back below its 50-day line. The Nasdaq Composite retreated 2.1%, touching its weakest levels since late November, while the S&P 500 fell 1.4%.

In contrast, the equal-weight S&P 500 ETF gained 0.3% for the week and rose 1% on Friday, marking a record intraday high. This breadth improvement suggests institutional capital is rotating into cyclical and value-oriented sectors rather than exiting equities altogether. Homebuilders, energy names and select industrial stocks outperformed, while semiconductors held up better than many expected despite broader AI concerns.

Sector Rotation and AI Disruption Fears

AI-driven uncertainty continues to ripple across industries. What began as pressure on software stocks has expanded into wealth management, commercial real estate and logistics companies. The theme is no longer limited to technology multiples but extends to business-model sustainability. Such cross-sector volatility complicates portfolio construction, especially for investors in Israel and the U.S. who rely heavily on global technology leaders for index performance.

Meanwhile, energy stocks posted their eighth consecutive weekly gain, supported by relatively stable crude prices near $62.89 per barrel. Financials, however, declined sharply, with the Financial Select SPDR ETF losing 4.8%. The 10-year Treasury yield fell 15 basis points to 4.055%, its lowest level since late November, reflecting both risk aversion and shifting rate expectations.

Managing Risk in a Trendless Market

In a market lacking clear direction, discipline becomes paramount. The breakdown below 50-day lines in key indexes signals caution, yet improving breadth and resilient equal-weight performance argue against broad capitulation. Investors may consider trimming oversized exposure to extended megacaps while selectively adding to sectors demonstrating relative strength.

Maintaining higher-than-usual cash levels, using tight stop-loss strategies and focusing on balance-sheet quality are prudent measures. Rather than chasing rebounds in volatile AI-linked names, allocating toward industries with tangible earnings visibility—such as industrials and energy—may reduce drawdown risk.

As Dow futures reopen, traders should watch whether megacap weakness persists or stabilizes. Sustained improvement in equal-weight performance could signal healthier internal market structure. Conversely, further deterioration in technology leaders may pressure broader sentiment. The coming weeks will test whether rotation can offset concentrated weakness or if defensive positioning will dominate once again.