Uncategorized, Weekly Update

Small Ball

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Published September 29, 2017


After spending much of the year lagging well behind their large-cap brethren, small caps stocks have caught fire! They are being spurred on by a shift in favored market sectors toward financial and energy companies as well as the announcement (finally!) of a tax cut plan by the Trump Administration. Investors hope this plan will spur growth in the domestic economy. And that supports smaller companies.

Chart 1: Small caps finally hit record highs

Small caps finally hit record highs

Larger companies have been driven higher by a synchronized improvement in global economies as we’ve written about recently. Now, the smaller companies have joined in to fuel the rally. THAT is the sign of a powerful market!


Market Update

Stocks slipped in Monday trade with the Nasdaq falling -0.9% while small and midcap indexes continued their recent outperformance, holding flat on the day. A comment from North Korea suggesting the U.S. has “declared war” on the country had a modest contribution to the dip overall. Stocks held flat Tuesday on little news before zipping solidly higher Wednesday as the Trump administration unveiled its long-awaited tax plan. Adding to the cheer was a powerhouse report from semiconductor firm Micron (MU) who sported a doubling of revenues over the prior year and saw its stock gallop +8% higher while Dow component Nike (NKE) slid -2% on a weaker outlook for margins. The market overall pushed higher by +0.4% while the Russell 2000 small-cap index leapt +1.9%. Thursday’s trade saw a digestion of the gain while Friday posted another largely positive session to end the 3rd quarter. The Nasdaq rose more than +0.5% on strength among Nvidia (NVDA) and Facebook (FB).

A solid week for stocks aided by the release of the tax reform plan. Small-cap stocks  (IWM) continued their torrid pace adding +2.92%. The Nasdaq 100 (QQQ) lifted +0.71% while the S&P 500 (SPY) rose +0.62%.

Warm wishes and until next week.