Jefferies: The Federal Reserve may change the situation of US stocks, small-cap stocks are expected to outperform large-cap technology stocks.
A strategist at Jefferies said that the Federal Reserve may trigger a shift in the stock market landscape, leading to small-cap stocks outperforming mega-cap tech stocks. Jefferies' Senior Vice President of Stock Research Product Management, Andrew Greenebaum, stated that data since 1990 shows that when the Federal Reserve cuts rates, the performance of the S&P 500 equal-weighted index outperforms traditional market cap-weighted benchmark indices. Data compiled by the company shows that in the past four rate-cut cycles, the equal-weighted index outperformed the traditional S&P 500 index by 0.6% over one year, around 4% over two years, and on average 12.5% over four years. Greenebaum wrote in a report to clients that as the Federal Reserve approaches a rate cut, "crowded trades" are pushing the weight of tech stocks in the index to record levels.
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