Rate-Sensitive Cyclical Stocks Poised For Rally As Fed Prepares To Cut Rates: 'We're On The Path To Goldilocks,' Says Bank Of America
Portfolio Pulse from Piero Cingari
Bank of America predicts a rally in rate-sensitive cyclical stocks as the Federal Reserve prepares to cut interest rates following benign inflation data. Small caps, represented by the iShares Russell 2000 ETF (IWM), outperformed large caps, tracked by the SPDR S&P 500 ETF Trust (SPY), last week. The second-quarter earnings season is expected to be crucial, with Bank of America anticipating a 2% EPS beat.
July 15, 2024 | 8:01 pm
News sentiment analysis
Sort by:
Ascending
NEUTRAL IMPACT
The SPDR S&P 500 ETF Trust (SPY) saw a modest rally of 0.9% last week, underperforming compared to small caps amid rate-cut speculations.
While SPY did rally, it underperformed compared to small caps. The modest gain suggests a more cautious investor sentiment towards large caps in the current rate-cut speculation environment.
CONFIDENCE 80
IMPORTANCE 60
RELEVANCE 70
POSITIVE IMPACT
The iShares Russell 2000 ETF (IWM) rallied by over 6% last week, outperforming large caps due to speculations of rate cuts by the Federal Reserve.
The significant rally in IWM indicates strong investor confidence in small caps benefiting from potential rate cuts. This trend is likely to continue in the short term.
CONFIDENCE 90
IMPORTANCE 80
RELEVANCE 90