Reported 3 months ago
On July 17, 2024, the US stock market saw the Dow Jones Industrial Average rise over 700 points to a new high, driven by expectations of an imminent interest rate cut by the Federal Reserve. The bullish market sentiment has spread from tech stocks to small-cap stocks, with the Russell 2000 index surging over 3% for five consecutive days. Analysts believe that the rally in small caps is just beginning, as evidenced by the significant increase in short positions in the index futures. The S&P 500 and Nasdaq also saw gains, but the focus was on small caps, signaling a potential shift in market leadership. This rotation from large tech stocks to small caps is attributed to optimism around rate cuts and inflation data, with small caps and industrial stocks benefitting more due to their reliance on borrowing costs compared to cash-rich tech giants. NVIDIA and Alphabet saw declines amid concerns of limited upside potential. This shift in market dynamics began a week ago when low inflation data suggested possible rate cuts by the Fed, boosting confidence in small-cap and cyclical stocks.
Source: YAHOO