As the market’s fortunes continue to rise and fall with big tech stocks like Nvidia and Apple, investors are also putting money into less-loved value and small-cap stocks, which are expected to benefit from lower interest rates.
Stocks have also remained higher after a forecast from Nvidia fell short of lofty investor expectations earlier this week, another sign that investors may be looking beyond technology. The S&P 500 index, a gauge of the average stock, hit a new record this week and is up about 10.5 percent so far this year, narrowing its performance gap with the S&P 500.
Technology stocks are expected to post market-beating earnings growth in every quarter through 2025, with third-quarter gains coming in at 15.3 percent, compared with a 7.5 percent gain for the S&P 500 as a whole, Reuters reported.
The Federal Reserve is expected to begin a cycle of rate cuts at its policy meeting on September 17-18.
Some investors believe rallies in these sectors and small-cap companies could go further if the Fed lowers borrowing costs while the economy remains healthy. Meanwhile, the so-called Magnificent Seven group of tech giants — which includes Nvidia, Tesla and Microsoft — has underperformed the other 493 stocks in the S&P 500 by 14 percentage points since the release of a weaker-than-expected U.S. inflation report on July 11, according to a Reuters report. Wall Street stocks rose and the Dow notched a second consecutive record closing high on Friday, with Tesla and Amazon rising after fresh U.S. economic data raised expectations that the Federal Reserve will cut interest rates modestly in September. The S&P 500 rose 1.01 percent to close at 5,648.40 points. The Nasdaq Composite ended 1.1 percent higher.
Frequently Asked Questions
Q1. What are US stock indices?
A1. The US stock market indices are the S&P 500, the Dow and the Nasdaq Composite.
Q2. What can be expected from the stocks?
Technology stocks are expected to post market-beating earnings growth in every quarter through 2025, with third-quarter gains of 15.3 percent compared with a 7.5 percent rise for the S&P 500 as a whole, according to a Reuters report.
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