Sitting here today after the week we’ve had, it seems hard to believe that last Friday Wall Street was on the way to its worst weekly stretch in months.

That feels like a long time ago after all the new record highs posted the last few days. The question is, which is the real market? The one that sold off a week ago on rate and inflation fears as volatility shot higher, or the one we’re in now where Treasury yields remain benign, stocks are having their best weekly performance since April, and volatility is back near recent lows?

You might want to wait before casting a vote. We’re in a twist and turn kind of market without a lot of conviction either way. Last week wasn’t necessarily an anomaly, but neither is this week. Low volume, light summer trading has been a feature at times, which arguably diminishes some of this rally’s punch.

In the meantime, those inflation fears that helped weigh things down earlier this month have certainly waned. People seem to think if the Fed does anything to taper the stimulus, it won’t be in the short-term barring any huge development. On a side note, crude is on track for its fifth-consecutive higher week. That’s a factor that you can’t rule out ultimately leaking into prices for consumers and companies.

For now, however, there’s not a lot out there suggesting Friday won’t be like the days we’ve just had. Major index futures rose overnight after a strong showing out of the Asian markets. The remains below 1.5%, and the Cboe Volatility Index () is flirting with 16 again. It was above 20 just a week ago.

Core personal consumption expenditure (PCE) prices increased 0.5% in May, a little less than the 0.6% consensus, so nothing jumps out right away from that report that would appear to have much of an impact. The year-over-year rise of 3.4% is the largest in decades, but that reflects comparisons to last year when COVID lockdowns were in place and spending was light.

Infrastructure, Stress Tests And Nike Provide Late-Week Boost

The good news just kept piling on yesterday, sending major indices to new record highs. First there was the infrastructure agreement on Capitol Hill. Then after the close we saw Nike (NYSE:) come in with strong earnings and the major Wall Street banks pass the Fed’s “stress test” with flying colors. All this news helped send NKE and the shares of most major Financial stocks higher in pre-market trading. NKE shares recently rose nearly 13% in pre-market trading.

One package didn’t get delivered, however, and it was FedEx (NYSE:) investors caught waiting at the mailbox. Shares of the package delivery company dropped sharply, around 4% in pre-market trading, after FDX reported earnings late yesterday.

It’s not like the earnings were bad, as FDX beat analysts’ average estimates on earnings per share and revenue. Having said that, some analysts wrote that the company’s two-cent beat wasn’t definitive enough, and might point to costs rising and the margin getting squeezed. You might want to start getting used to companies saying their costs are rising. It wouldn’t be a surprise to hear more of that once earnings season gets into full swing next month.

Getting back to NKE, it enjoyed another strong quarter for online sales and its overall revenue beat Wall Street’s expectations by an impressive $1 billion. Higher wholesale shipments during the quarter for NKE could be a sign that the supply chain struggles it experienced earlier this year started to fade. The company’s strong outlook also seemed to spark some buying.

Keep an eye on the financial sector today after the positive stress test results to see if banks like JPMorgan (NYSE:), Bank of America (NYSE:) and others can hold onto their overnight gains. The sector rose in the day session yesterday as investors apparently looked ahead to what might be positive results and hopes that the industry might announce higher dividends and stock buybacks. Now we’ll see if it’s a “buy the rumor, sell the fact” kind of situation. The financial sector is up a massive 22% so far this year, but down 4% over the last month.

‘Buying The Dip’ Has Helped Tech, But Financials Now In Spotlight

This week’s market offers more evidence that “buy the dip” hasn’t gone out of style. The “buy the dip” mentality has worked out so well the last few years that investors seem to keep returning to it, kind of like a football team running the same play as long as it keeps getting them yards.

The tech sector might have been the beneficiary of buy the dip recently after it had a rough spring, but tech took a back seat yesterday to some of the more cyclical parts of the market. Financials had a pretty nice day despite no real moves in the rate picture, but the infrastructure deal and anticipation of positive stress test results from the Fed could have given financials some help.

From an infrastructure perspective, ideas that $1 trillion or more in additional government spending might be down the road could have some investors thinking about chances for higher interest rates. More money hitting the economy could potentially mean more inflation pressure leading to Treasury market investors demanding higher yields for their money. Higher yields often help big banks on a net-interest income basis.

Industrials and Materials also received a bit of a tailwind from the infrastructure news, with stocks like Boeing (NYSE:), Cummins (NYSE:), Deere (), Freeport-McMoran (NYSE:), Vulcan Materials (NYSE:) and Caterpillar (NYSE:) all getting into the swing of things and having a nice Thursday. Still, some analysts point out that an interim deal on infrastructure is still a long way from shovels in the ground, with both parties on Capitol Hill seeing objections from some of their members. There’s likely still a long runway ahead.

Tesla Charging Higher After Screeching Brakes

It’s been a while since we discussed electric vehicles, but Tesla (NASDAQ:) is expected to come out potentially as soon as next week with its Q2 vehicle sales report. Hopes ahead of that might be helping lift the stock after it sank from $900 to below $600 a share at times this year. It’s been a stomach-churning ride for those who held on, but lately things have gotten a bit smoother. TSLA tested $700 on Thursday as it appears to have made a bit of a technical breakout the last few days.

Another stock getting some affection yesterday was Eli Lilly (NYSE:) after the U.S. Food and Drug Administration (FDA) said it had assigned the “breakthrough therapy” designation to LLY’s donanemab for Alzheimer’s disease. That came after a similar drug from Biogen (NASDAQ:) got FDA approval earlier this month. The FDA approval for BIIB helped rekindle some excitement in hHealth care as a whole because it appeared to suggest the FDA might be getting more flexible in its approval process. Health care is in the top 50% of sector performers over the last three months.

Unfortunately for anyone holding BIIB, the parade for LLY on Thursday turned into a rainout for BIIB shares, which crumbled 6%. This may reflect worries about competition in the Alzheimer’s space. It’s not like people didn’t know LLY’s drug was making progress, but as CNBC reported, analysts generally hadn’t expected it to come this quickly.

Looking ahead to next week, the July 2 monthly payrolls report could end up being the main focus as we head toward the July 4 weekend. It’s also the end of the Q2 on Wednesday, which sometimes can cause a little volatility as some traders and investors do a little position shifting.

Wrong Actor For Role: When people talk about “big tech” and how it’s part of the “growth” stock story vs. value stocks, sometimes things are miscast. Apple (NASDAQ:) and Microsoft (NASDAQ:) are so-called “growth” stocks in big tech that we’ve seen investors gravitate toward in times of trouble. Though both companies have had their ups and downs over the years and (like any investment) can’t necessarily be counted on for steady growth, some investors see them as pillars of strength.

Many people buying AAPL and MSFT—and to a lesser extent Amazon (NASDAQ:), Alphabet (NASDAQ:), and Facebook (NASDAQ:)—see them as a “safety play” (though no investment is truly safe), and aren’t buying them for growth. In the last few days, we’ve seen people coming back to these names. In the short-term, rising rates could hurt these stocks along with the rest of tech, but in the longer term a higher-rate environment is probably a bigger problem for other areas of tech, like semiconductors. Chip stocks could be the ones that suffer more from that than established names like MSFT and AAPL.

Back In The Mother Country: Tired of hearing the word “transitory” from the Fed when it comes to inflation forecasts? It sounds like even moving to England won’t be far enough to get away from the “t” word. The Bank of England (BoE) held its key rate steady yesterday, and like the Fed, had soothing words for anyone worried about inflation. The BoE warned that inflation would likely top 3%, but it would be “for a temporary period.” Earlier this month, the European Central Bank (ECB) also kept rates unchanged.

Checking rates across the world, none of the major markets seems to anticipate any sort of inflationary firestorm in the near future. The U.S. benchmark 10-year rate of 1.49% compares with negative 0.18% for the German bund, 0.04% for Japan’s 10-year yield, and 0.74% for the British 10-year Gilt. All of this could help explain why it’s so hard for U.S. yields to rally, as foreign investors may be buying up U.S. debt to get a crack at higher interest rates here compared to at home.

Taking Stock: Even if you haven’t checked your portfolio in a while, mid-year is arguably the best time to do look again. The key is to go back to your long-term plan that you hopefully put into place at the end of 2020 and make sure your balances now match what you’d planned back then. If you planned to allocate 60% of your investment funds into stocks and 40% into bonds, it’s possible that’s changed a bit as stocks climbed and bonds fell earlier this year before settling into their current doldrums. Maybe the balance is 50-50 now. If that’s the case, you have to determine if you’re comfortable being more conservative or if you need to take on additional risk by adding to your stock portfolio and selling some fixed income. Every investor is different, so there’s no one right or wrong way to do this.

However, one way to decide is to consider whether your life and goals have changed a good deal since December. Have there been any major events in your life outside of staying at home like we all are? Is there a new baby on the way? Are you getting closer to having college payments? Is an elderly parent in need of your care? All these things can lead to decisions about where to invest your money.

Disclaimer: TD Ameritrade® commentary for educational purposes only. Member SIPC. Options involve risks and are not suitable for all investors. Please read Characteristics and Risks of Standardized Options.

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