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Income investors often favor value investments like midstream infrastructure, equity REITs, and blue-chip cash cows for yields between 5% to 8%. Long-term alpha-like returns are unlikely with these assets, but they offer stable income streams that are suitable for defensive retirement portfolios. Some investors might, however, want to combine high yield with growth-like exposure.
Since small-cap stocks are more domestically-focused, an improving US economy and a dovish Fed are tailwinds for small-cap stocks and ETFs.
Like those represented by the iShares Russell 2000 ETF NYSE: IWM, small-cap stocks are especially sensitive to interest rate changes. Historically, after the Federal Reserve implements rate cuts, all market cap sectors tend to rally, but small caps often outperform their larger-cap peers.
Small caps tend to outperform as falling borrowing costs are a tailwind. These companies rely more on debt than their larger-cap peers.
The Fed is about to cut its benchmark policy rate for the first time in more than four years.
VNQ, ITB, XLY, IWM and GLD are included in this Analyst Blog.
The Fed is scheduled for the first rate cut since 2020 in its meeting this week. Lower rates stimulate economic growth and provide a boost to the stock market.
Investors may be shaken up by the recent volatility in the stock market, and now more than ever, it is important to stick to fundamentals and attempt to understand how and where money will begin to shift in the next quarter or two. Ideally, investors can get on these trends before they take on momentum during the whole market shift, where a few asset classes come to mind.
Chipmaker Nvidia has been the best-performing stock in the S&P 500 since January 2023. The Russell 2000 tracks small-cap companies that account for 5% of U.S. stocks by market value.
Markets are bracing for the most-anticipated quarterly report in Nvidia (NVDA), but there's other aspects of the markets to keep your eyes on. From small caps to major corporations, Nicole Petallides, Ben Lichtenstein and Don Kaufman break down the technical trends of the iShares Russell 2000 ETF (IWM), Conocophillips (COP), and Disney (DIS).