Investors also continued rotating from mega-cap technology, which has seen monster gains amid optimism around artificial intelligence, into small-cap stocks. The Russell 2000 rose almost 2% and was on track for its fifth straight day of gains, while the technology-heavy Nasdaq declined. Notably, AI darling Nvidia and software giant Microsoft each dropped more than 1%.

“There’s a lot of momentum behind this rotation trade from from big-cap tech into small caps and into the average stock,” said Ross Mayfield, investment strategist at Baird. “It’s a rotation, but it’s much more about the upside in the more cyclical sectors in the market than a referendum on AI’s long-term potential.”

This comes as hopes grow that the Federal Reserve will begin lowering interest rates without substantial weakening within the economy, according to Quincy Krosby, chief global strategist for LPL Financial. Traders now see 100% odds of a decrease to the borrowing cost by September, according to the CME FedWatch tool.

Retail sales data offered the latest sign of this scenario, Krosby said. June sales were unchanged, while economists polled by Dow Jones predicted a decline of 0.4%. Excluding autos, sales rose 0.4%, a larger gain than the 0.1% consensus forecast.

This data “should be positive for markets,” Krosby said. “Investors prefer the launch of a Fed easing cycle to begin with a still solid economic backdrop.”