Image Source: Pixabay
 

Something clicked for the bulls last week.

The first full week of 2026 saw both the S&P 500 and the Dow register new all-time highs. The Nasdaq still hasn't reclaimed its October peak, but it led the charge with the strongest weekly gains.

The real story isn't just that stocks went up. It's which stocks went up--and what that tells us about where the economy is headed.

The market's leadership is evolving. Last week, we saw a very key growth sector step up and outshine everything else: consumer discretionary. This sector includes two heavyweights from the Magnificent Seven. 

Build It, and the Consumer Will Buy
 

Why Consumer Discretionary Matters
 

Consumer discretionary stocks represent the stuff people buy when they're feeling confident. Cars, electronics, vacations, and Amazon packages are showing up three times a week.

Consumer spending drives approximately 70% of GDP.

That's not a typo.

When Americans open their wallets, the economy moves. So when the market is buying up consumer discretionary more than anything else, it's a sign that good things are happening.

The bulls aren't just optimistic. They're putting real money behind a bet that Q4 GDP will blow expectations out of the water.

Amazon and Tesla: The Heavyweights Leading the Charge
 

The consumer discretionary ETF, XLY, has huge positions in Amazon (AMZN) and Tesla (TSLA). Both are flashing bullish signals.

Amazon just closed at its highest weekly level in history.
 

Think about that. After pandemic boom, post-pandemic hangover, and margin compression fears--it just hit a new high.

Amazon's web reaches roughly 8-10% of all US consumer transactions. When this stock breaks out, it's telling you something about the American consumer.

Meanwhile, Tesla quietly completed a higher-low last week, reinforcing its uptrend.

Tesla best represents my "industrial tech" theme for 2026. But obviously, they sell cars too. And not cheap ones.

When people are buying Teslas, they're not worried about making rent.

The Market's Message Is Clear
 

You wouldn't see consumer discretionary outperforming if the market was about to roll over. Full stop.

This isn't a sector that leads into recessions. It's a sector that leads into expansions.

The market is pricing in more growth. Not a single sector on last week's leaderboard is classified as defensive.

No utilities. No healthcare. No consumer staples hiding at the top.

When defensive sectors lead, investors are worried and seeking safety. When cyclical sectors like consumer discretionary lead, investors are betting on acceleration.

Right now, the message from sector rotation couldn't be clearer.

The Big Question Ahead
 

The big question now is whether tech can come alive and complete the bullish rotation we've seen over the past three months.

Tech has been the laggard. The Nasdaq's inability to reclaim October highs while the Dow and S&P print new records tells you there's still work to do.

But if consumer discretionary is leading and growth expectations are rising, tech typically isn't far behind.

The rotation from defensive to offensive has been textbook. First, industrials woke up. Then financials caught a bid. Now, consumer discretionary is taking the baton.

Tech completing this relay would be the final piece. The signal that the bull market has fully broadened out, and the October correction was just a healthy reset.

Bottom Line
 

The bulls figured out why stocks were on sale late last year.

They weren't broken. They were discounted.

Consumer discretionary leading tells us the market believes the American consumer remains strong. Q4 GDP will surprise to the upside. 2026 is shaping up to be another growth year.

Watch tech closely in the coming weeks. If it joins the party, this bull market is just getting started.

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