**Weekly Market Recap: A Mixed Bag with Big Moves Under the Surface**

Last week was a rollercoaster for the markets. While the Dow Jones managed to gain 1.05%, the S&P 500 slipped by 0.63% even after hitting a new intraday high. The tech-heavy Nasdaq had it worse, dropping 1.62%, showing signs of weakness in the technology sector.

However, small-cap stocks stole the spotlight. The Russell 2000 index surged to new all-time highs, fueled by strong performances in financials, healthcare, and industrials. This shift suggests investors are rotating money out of mega-cap tech and into smaller, more economically sensitive companies.

Meanwhile, crypto markets struggled, and silver continued its climb to fresh all-time highs. Despite a Fed rate cut, risk assets didn’t rally as expected—highlighting that traders are cautious even in an easier monetary environment.

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**Top Stock Picks This Week**

**Invesco Ltd. (NYSE: IVZ) – 61% Upside Potential**

Invesco is a global investment manager offering ETFs, mutual funds, and alternative investment products. With a strong push into high-growth areas like China and India, plus booming demand for ETFs and fixed income products, Invesco is gaining market share fast.

In Q3 2025, it reported $1.19 billion in revenue and $275.4 million in earnings. Assets under management grew 6.2% to $2.125 trillion. With a P/E ratio of 17.56 and a healthy dividend yield of 3.49%, this stock looks undervalued.

The stock recently broke out of an ascending triangle pattern, suggesting continued bullish momentum. The company also raised its dividend by 2.4%, making it even more appealing to income investors.

**Bullish Above:** $22-$23
**Target Price:** $42-$43

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**Oceaneering International (NYSE: OII) – 34% Upside Potential**

Oceaneering provides underwater robotics and engineering services to offshore energy companies. It’s benefiting from the rebound in deepwater oil exploration and long-term contracts that offer revenue stability.

The company reported Q3 revenue of $743 million (up 9%) and earnings up 73% to $71.3 million. With a P/E of just 11.81 and strong contract wins—including deals with BP and Harvey Deep Sea—Oceaneering is well-positioned for growth.

They’re also investing in cutting-edge tech like Vision™ Subsea, a cloud-based tool for remote asset inspections, which boosts their competitive edge.

**Bullish Above:** $23-$24
**Target Price:** $35-$36

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**Xometry Inc. (NASDAQ: XMTR) – 89% Upside Potential**

Xometry is an AI-powered marketplace for custom manufacturing services like CNC machining and 3D printing. It connects buyers with suppliers globally, offering instant quotes and lead times.

In Q3 2025, revenue jumped 28% year-over-year to $181 million, driven by strong growth in its marketplace services. Gross margins hit a record 35.7%, and adjusted EBITDA reached $6.1 million.

Xometry is gaining traction due to supply chain digitalization, especially in aerospace, automotive, and medical devices. New tools like AI-powered quoting and a mobile app for suppliers are enhancing user experience and driving growth.

**Bullish Above:** $48-$50
**Target Price:** $110-$112

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**Big Themes to Watch This Week**

**The Fed’s Latest Move & Market Reaction**

The Federal Reserve cut interest rates by 25 basis points last week, bringing the target range to 3.50%-3.75%. This was the third cut in a row as the Fed tries to support a slowing labor market and bring inflation closer to its 2% goal.

However, not everyone at the Fed agreed—three members dissented. One wanted a bigger cut; two wanted no change at all. The Fed is now focusing on incoming data to guide future moves.

Watch how this affects bond markets and liquidity—especially shorter-term Treasuries—as Powell announced plans to buy more of them to ensure stable market functioning.

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**Russell 2000 Breaks Out – Small Caps Are Back**

The Russell 2000 small-cap index hit new all-time highs last week. This marks a big shift as small caps have lagged behind large caps for years.

Lower interest rates help these companies by reducing borrowing costs—many carry floating-rate debt. Add in rising M&A activity and renewed IPO interest, especially in biotech, and small caps are positioned for a strong 2026.

Key sectors driving the rally: Financials, industrials, and healthcare—all major components of the index.

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**Sector Performance Spotlight**

Since the beginning of Q4, healthcare (XLV) has been the top-performing sector. Financials (XLF) are close behind thanks to a steepening yield curve.

Technology has been average—not great—but the real laggards are utilities (XLU) and consumer staples (XLP). These traditionally defensive sectors being weak is actually a bullish sign for growth stocks.

Materials and consumer discretionary sectors are starting to show strength too—a mixed signal that could lead to more volatility or upside momentum depending on macro conditions.

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**AI Trade Gaining Steam Again (SMH/QQQ)**

Semiconductors are showing strength relative to the broader tech sector, measured by the SMH/QQQ ratio. This ratio recently broke out from a consolidation pattern—a bullish signal.

Chips are essential for AI development and tend to lead tech performance both on the way up and down. As long as this ratio climbs, it suggests continued momentum in AI stocks and tech leadership.

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**DeFi Momentum: Ethereum vs Bitcoin (ETH/BTC)**

Crypto is down overall, but Ethereum is quietly outperforming Bitcoin again. Since April, ETH has been gaining ground relative to BTC.

After a short-term pullback between August and November, ETH formed a higher-low pattern—a bullish setup if it breaks resistance.

If Ethereum breaks above its recent high relative to Bitcoin, expect strong gains in DeFi-related tokens and platforms going forward.

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**Liquidity Watch: Junk Bonds vs Treasuries (HYG/IEI)**

Even with the Fed cutting rates, we need to watch how bond markets react. One key indicator is the HYG/IEI ratio—comparing junk bonds to mid-term Treasuries.

A rising ratio signals improving liquidity and investor confidence in riskier assets. Right now, this ratio is consolidating near breakout levels.

If it breaks higher, expect stocks to rally sharply as liquidity conditions improve across markets.

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**Bitcoin Update: Still Facing Headwinds**

Bitcoin had a brief rally after the Fed cut rates but failed to hold its gains. Technically speaking, it’s still in a downtrend—making lower highs and lower lows.

For bulls to regain control, we need to see Bitcoin form a higher-low soon. If it can break through resistance around $94K-$95K, we could see another leg up toward $105K.

Until then, expect more sideways action or further pullbacks unless momentum shifts decisively back in favor of buyers.

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**Final Thoughts**

Markets are at a turning point—with liquidity conditions improving and rate cuts supporting growth assets like small caps, AI stocks, and even crypto (if technical resistance levels break). Keep an eye on bond spreads, sector rotation trends, and leading indicators like semiconductors and Ethereum for clues about what’s next.