|Day's Range||1.7300 - 2.0400|
Craig Hodges, Hodges Funds Portfolio Manager, joins Yahoo Finance to talk about why small caps may be ready to bounce back. He joins Yahoo Finance's Julie Hyman, Adam Shapiro, Andy Serwer and Bullseye Brief's Adam Johnson.
The spread between the 2-year and 10-year yield is now back above 10 basis points, and the further they get away from each other the more things might calm down. Another piece of news that might be helping: Reports in the media say Huawei will get a three-month extension from the U.S. Department of Commerce on a license that allows it to buy parts from U.S. companies. Fed Chair Jerome Powell is scheduled to speak Friday morning.
If it feels to Wall Street investors that a period of seismic volatility has gripped markets, they aren’t alone.
The big stock slide continued in late-afternoon trading as a key indicator of recession flashed warning signals of an impending recession. Banks and software firms fell sharply.
Mixed results from data releases and corporate earnings have resulted in cautious optimism if you're investing in ETFs, but the waters have muddied.
Small-cap stocks have been lagging the market in recent months. What is sure is that the S&P 500 index (SPX) has been one of the strongest market averages in recent months. Over the same three months, the Russell 2000 index (RUT) (a widely-used benchmark for the small-cap sector) lost 0.8% and the iShares Micro-Cap ETF (IWC) lost 3.4%.
If you don't own these up-and-coming small companies in your investment portfolio yet, you could be missing out on a big opportunity for market-beating returns.
Just like clockwork, the markets are back to mid-summer roller coaster ride territory. At this point it's not like Disney's Expedition Everest, Space Mountain or Rock n' Roller Coaster, but just enough to make you feel that you are definitely on some kind of ride, and it's not exactly unpleasant, at least at this point. Since my Wednesday column ran the S&P 500 has experienced two more "volatile" days (with volatility defined as up or down at least 1%), and both have been of the positive variety.
Last week's announcement of more U.S. tariffs on Chinese goods may have undermined the prospects for small-cap stocks to rebound this year, even after a brief respite from the Federal Reserve's recent interest-rate cut. Just a day after the Fed cut interest rates for the first time in more than a decade, President Donald Trump vowed on Aug. 1 to impose 10% tariffs on an additional $300 billion of Chinese goods beginning on Sept. 1.
Tariffs have been the big concern in the economy for months, but the latest stage of the trade war—an unpredictable broadening that has raised recession fears—is much more worrisome.
As has been widely discussed, small-cap stocks and exchange-traded funds are trailing their large-cap rivals. Last year was a good example of that when the Russell 2000 entered a bear market before large-cap benchmarks swooned in the fourth quarter.
Proof of that might be yesterday’s session, when stocks cratered despite the Fed lowering interest rates. Many investors wanted the Fed to signal the start of a prolonged rate-cutting cycle, not just a simple rate cut, but that didn’t happen. At least that was the takeaway from Fed Chairman Jerome Powell’s press conference, though he did try to walk back initial comments that many interpreted as him saying this was a one-and-done easing.
The Fed chairman's news conference threw markets for a loop with hawkish words that did not support the Fed's dovish actions.
The Dow Jones Industrial Average sank to a triple-digit loss in afternoon trading Wednesday, after the Federal Reserve's decision to cut its target on overnight interest rates, but the stock market's breadth remained positive, helped by strength in small-capitalization stocks. The number of advancing stock outnumbered decliners 1,540 to 1,333 on the NYSE and 1,610 to 1,331 on the Nasdaq exchange. Where breadth data showed some weakness was in the larger, more active stocks, as volume of advancing stocks represented just 45.2% of total volume on the Big Board and 36.7% of total volume on the Nasdaq. Meanwhile, the Dow fell 148 points, or 0.5%, with 25 of 30 components losing ground. Just before the Fed's rate decision, the Dow was up about 14 points. The S&P 500 gave up 0.5% and the Nasdaq Composite shed 0.4%, while the Russell 2000 of small-cap stocks rose 0.4%.
Shares of smaller U.S. companies have gotten cheap over the past year, significantly lagging their large-cap counterparts, and could be poised for a turnaround following a highly anticipated interest-rate cut from the Federal Reserve. Worries about a slowdown in economic growth have soured investor sentiment toward small-cap companies, which are more domestically focused than large-cap multinationals. Profits for small-cap companies have also been squeezed by higher input costs as a result of the U.S.-China trade war, so the group is more vulnerable to an aging business cycle.
Stocks ended mostly down Tuesday on major stock indexes as investors awaited the outcome of ongoing U.S.-China trade talks and Wednesday's Fed meeting
This week has it all, and it starts with the stock market at all-time highs after solid results late last week from Alphabet Inc (NASDAQ: GOOG), Starbucks Corporation (NASDAQ: SBUX), and Twitter Inc (NYSE: TWTR). A better-than-expected read on Q2 gross domestic product (GDP) didn’t hurt, either. One of the big ones to potentially watch today after the close is Beyond Meat Inc (NASDAQ: BYND).
A version of this article first appeared in the June 2019 issue of Morningstar FundInvestor. In equity-income investing, you get what you don't reach for.Stocks remain an important part of income-seeking investors' portfolios.
Big earnings continued to drive action on the major stock indexes Friday, with Alphabet's Google, Twitter and Starbucks leading the way.
The Federal Reserve is expected to cut interest rates next week even though the US economy is doing pretty well. Here's former White House Director of Economic Policy Todd Buchholz take on why.