The rotation of the rotation has begun on Wall Street

Data released in the US last week increased concerns that the Fed may be too late to start cutting interest rates, and Wall Street indexes have fallen sharply since Wednesday, when the US Federal Reserve kept policy rates steady. Fed Chair Jerome Powell's statement that they may cut interest rates in September also failed to prevent the sell-off. The technology-heavy Nasdaq 100 index has entered a technical correction zone, falling more than 10% since July 10, while the S&P 500 has fallen 3.2% in two days, its worst two-day loss since March 2023. The index also surpassed its worst nonfarm payrolls day since October 2022. However, not every sector was affected by the sell-off. The rotation, which had previously started from technology companies to small company stocks, has now turned to dividend-paying companies. While technology and consumer-focused stocks lost ground throughout the week, high-dividend-paying electric, water and gas companies and real estate stocks, which investors favor when bond yields fall, were the clear best performers on the S&P 500 this week. “The rotation continues as the cooling labor market expects interest rates to be lowered,” said Eric Diton, chief executive officer of Wealth Alliance. “Big tech companies don’t need a rate cut because they have strong balance sheets and high valuations. Smaller companies are more indebted and riskier, so dividend-paying stocks are preferred,” he said. Investors poured about $1 billion into U.S. exchange-traded funds of real estate and electric, gas and water utilities last week, compared with just $300 million in technology ETFs, according to Bloomberg Intelligence data.