The Nasdaq and S&P 500 opened with gusto, hitting fresh record highs, but some profit-taking action has those indices defending their daily baselines. Meanwhile, the Russell 2000 is hitting session highs as small- and mid-caps outperform.

The rise in stocks and move lower in yields came after Treasury Secretary Scott Bessent urged the Fed to cut interest rates by 150 basis points.

Five sectors are moving higher, with Health Care (XLV) in the lead as investors go bottom fishing in the sector. Industrials (XLI) and Utilities (XLU) are lagging as investors take profits and rotate into stocks that have lagged recently.

Consumer Discretionary (XLY) is the runner-up, with many of the top movers being home builders which are benefiting from the prospect of lower rates.

Mortgage rates follow the Ten-Year Treasury Yield (TNX), which is down 5.8 basis points and may look to retest the 4.2% level.

Investors are becoming more bullish with the amount of assets in leveraged ETFs rising to $119B, the highest reading since the metric started being tracked by Morningstar in 1993. Furthermore, inverse funds have dropped from their $22B peak in 2022 to $12.5B, indicating betting against the market is becoming a rarer trade.