|Day's Range||1,547.64 - 1,561.56|
|52 Week Range||1,266.92 - 1,742.09|
Major stock indexes posted gains early, but gains faded after Iran reportedly seized a British oil tanker and its 23-member crew in the Gulf.
It hasn’t been a good year for small-capitalization stocks, but betting on the best performers in the group is paying off.
There seems little doubt that if inflation expectations resume a trend lower, then the need for an aggressive response from the Federal Reserve increases and this will have a greater effect on rate cut expectations, bond yields, the USD, equities and gold.
Major stock indexes continued to slump late Tuesday, as nervous investors awaited earnings results for IBM and Netflix. Software stocks rebounded.
The Russell 2000 index (RUT) which comprises roughly 2,000 U.S. companies with market capitalizations below $10.1 billion and a median market value of $791 million, hit a record high way back in August of 2018, before entering a bear market that sent the index as much as 27.2% lower last December. Steven DeSanctis, equity strategist at investment bank Jeffries Group, wrote in a note to clients Wednesday that while he doesn’t see the Russell hitting a new record this year, he has raised his year end target for the small-cap index to 1,665, or a 6.4% increase in the second half of 2019, compared with flat growth for the S&P 500. “Our relative valuation model now stands in the 17th percentile, and the last time small was this cheap was back in mid 2003,” he wrote.
The Federal Reserve is almost certain to cut rates at the end of July — but don’t expect a melt-up, usually marked by a powerful rally followed by a substantial selloff, says Mark Haefele, global chief investment officer at UBS Global Wealth Management.
Despite better-than-expected retail numbers and some decent earnings reports from banks, the very slow trading action continues. Breadth and the major indices are almost dead even. The Russell 2000 ETF is showing a little relative strength, but if you are looking for pockets of momentum or strong themes, you won't find much.
The Dow Jones Industrial Average is being stingy with its strong 1.5% gain from last week. Netflix is selling off and faces a key test at the 50-day.
Broadcom and Gilead Sciences took early leads early Monday, but Citigroup led banks lower and Goldman and Boeing dragged on the Dow Jones industrials.
A stock-market index of small caps is at its weakest versus the S&P 500 since the financial crisis, suggesting a liquidity problem is brewing.
Amazon , Facebook , Alphabet , and Apple will all send representation, though all of us know that any legislation is still a long way off. Speaking of Amazon, Just how big a deal is Prime Day? The fact that Target matched Amazon's efforts with their own two day "Deal Days" event, and that Walmart moved ahead with a three day online sale that began on Sunday has made the early part of this week seem almost festive.
Conventional wisdom holds that the small-cap stock arena is a more-fertile hunting ground for active managers than large-cap stocks, as smaller firms tend to be less widely followed, which makes them more likely to be mispriced. Not all small-cap indexes are created equal. The popular Russell 2000 Index has consistently lagged other broad market-cap-weighted small-cap indexes.
The number of contracting new highs means it is harder to find opportunities on the long side, and points to a narrowing, not an expanding, breadth of the market.
The rallies in the Dow Jones Industrial Average and the S&P 500 come despite bearish stock market breadth data. The number of declining stocks is outnumbering advancers by 1,448 to 1,243 on the NYSE and by 1,626 to 1,053 on the Nasdaq exchange. In addition, volume in declining stocks represents 55.3% of total volume on the Big Board and 50.2% on the Nasdaq. The Dow was up 183 points, or 0.7%, the S&P 500 gained 0.2% and the Nasdaq Composite tacked on 0.2%. The Russell 2000 index of small capitalization stocks , however, shed 0.6%.
Money is shifting to a narrower group of big caps, which is likely due to allocation decisions by large pension plans that are reacting to the Fed.
Shares rose Thursday in Asia, tracking gains on Wall Street after Federal Reserve Chairman Jerome Powell suggested the U.S. central bank is ready to cut interest rates for the first time in a decade.
The stock market continued its bullish gains late Wednesday following Fed Chief Jerome Powell's dovish remarks about future interest rate policy.
The Dow Jones industrials led a weak start Tuesday, as Virgin Galactic moved toward an IPO and Netflix stock jumped toward a new buy point.
Even as record highs this week in the major U.S. stock indexes telegraph confidence on Wall Street, caution abounds in other U.S. markets, where falling bond yields and flailing small-cap stocks indicate investors are torn about where to place bets. Hints from Federal Reserve policymakers that the central bank will cut interest rates have buoyed both U.S. stocks and Treasuries. Such a conundrum was evident on Friday as stocks fell in response to stronger-than-expected U.S. payrolls data, which dampened expectations of a Fed rate cut.
It’s been a short but memorable holiday trading week, with markets gapping up after Sunday’s open on reports of positive developments in the U.S./China Trade War and continuing to drift up during the week. Three of the four major equity index futures notched new all-time highs, including a close above the 3,000 level for S&P futures. Small-caps are once again the laggard of the group, with Russell 2000 futures actually losing about 1% since July 1 as of this morning’s early trading.
At the same time, small-cap stocks are lagging a bit and Treasury yields continue to forecast some caution. The bond market could be flashing a warning sign about the economy, it could be caution ahead of Friday’s jobs report, or it could be a result of overseas demand for U.S. Treasuries that command higher yields than those in places like Europe. With today a shortened one ending at 1 p.m. ET for the major U.S. stock exchanges, focus could continue to veer away from the tariff truce and toward Friday morning’s U.S. jobs report.
Hodges Funds Portfolio Manager Eric Marshall discusses the small caps to keep an eye on with Yahoo Finance's Adam Shapiro and Julie Hyman.