QVMS - The U.S. Small Cap Rally Has Been Fast And Furious. But Is It Here To Stay?
2024-07-26 03:35:00 ET
Summary
- After months of struggle, U.S. small cap stocks have staged a remarkable turnaround in July, rising 9% so far this month. U.S. large cap stocks, meanwhile, are roughly flat on the month.
- The rally in small caps is being driven by multiple expansions rather than by actual earnings growth and profitability numbers.
- The small cap rally has primarily been a de-risking event. It's unclear at this point whether it’s just a blip or the beginning of a new trend in market leadership.
Well, that was fast.
A month ago, we wrote about why allocating to small cap equities was still a good idea . And in what feels like the blink of an eye, investors have piled into U.S. small cap stocks in droves the past two weeks-after months of mostly underweighting the asset class in favor of mega cap tech stocks. If it feels like it was only yesterday when small caps were making headlines for all the wrong reasons-their woeful underperformance in comparison to their large cap brethren being reason #1-it's because it was....
The U.S. Small Cap Rally Has Been Fast And Furious. But Is It Here To Stay?