Smaller Firms Beat Big Tech on Fed Cut Bets – US Market Wrap

Stocks reached all-time highs on speculation that the Federal Reserve will soon begin cutting interest rates, fueling a rush into riskier sectors of the market.
Since last week’s soft inflation data, Wall Street has continued to see money flow into small caps and out of megacap “safety” stocks.

Over the last four sessions, the Russell 2000 outperformed the Nasdaq 100 by nearly 12 percentage points, a feat not seen since 2011. An equal-weighted version of the S&P 500, which includes companies such as Nvidia and Dollar Tree, outperformed the US stock market benchmark. That index is less sensitive to gains from the largest companies, offering hope that the rally will broaden.

The S&P 500 climbed to around 5,667, setting its 38th record this year. The Dow Jones Industrial Average gained nearly 2%. The Russell 2000 rose 3.5%, its best five-day run since April 2020. The Nasdaq 100 showed little change. Treasury 10-year yields fell seven basis points, to 4.16%. Gold reached a record high.

Traders also wade through earnings. Bank of America rose after announcing that net interest income would increase by the end of the year. Morgan Stanley’s stock fell as its wealth management business failed to meet expectations. Charles Schwab has warned that it will have to shrink in order to protect profits.