Analysts debate if bull market broadens or if rotation from large-cap stocks is temporary

From Investing.com: 2024-07-21 05:01:02

Investors are analyzing the recent outperformance of the S&P 400 MidCaps and S&P 600 SmallCaps, known collectively as “SMidCaps.” Some believe it indicates a broadening of the bull market, while others see it as a temporary rotation out of large-cap stocks.

Yardeni Research analysts shared five key insights: 1) Forward earnings for S&P 500 LargeCaps reached new record highs, while SMidCaps have not surpassed their 2022 peaks. 2) SMidCaps’ forward revenues have stagnated, contrasting the S&P 500’s climb. 3) Smaller companies struggle to improve profit margins. 4) Economic growth could boost the stock market breadth. 5) Geopolitical risks, like potential semiconductor chip restrictions, are a concern.

Analysts note that a recent tech selloff was influenced by the Biden administration’s warning about potential restrictions on semiconductor chip sales to China and former President Trump’s comments about Taiwan. The iShares Semiconductor ETF tumbled more than 7% in response.



Read more at Investing.com: Is the bull market broadening or rotating? Yardeni Research answers By Investing.com