Jul 26, 2024 - Business
The Great Rotation, in perspective
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The narrative of the stock market over the past couple of weeks is clear: Magnificent Seven are imploding, while small caps are on a tear. The big picture, however, remains unchanged.
Why it matters: The so-called Great Rotation is the phenomenon whereby megacap tech stocks are sold with the proceeds plowed into small caps.
Follow the money: In just five trading sessions after July 9, the Russell 2000 index of smaller companies spiked by more than 11%. Meanwhile, the S&P 500 information technology sector has sunk by 8% since then.
The bottom line: Small-cap stocks still trade significantly below their 2021 highs. If they're doing well right now, it's from a weak base.
