Mega-cap tech is getting routed but small caps are thriving — bet on the Russell 2000
Massive tech companies are seeing their stock prices fall, but smaller companies are quietly having their best year in decades. With the President pushing the Federal Reserve to cut interest rates, smaller companies stand to benefit the most because they rely heavily on borrowing to grow.
Idea
While mega-cap tech stocks like Microsoft suffer historic routs due to heavy spending fears, small-cap stocks are booming and on pace for their best first half since 1991. This divergence is being fueled by political pressure on the Fed to cut interest rates, which historically acts as massive tailwind for small companies that carry more debt. As Wall Street looks for alternatives to volatile big tech, money is rapidly rotating into smaller, domestic companies.