The Puzzle of the Small-Stock Rally
·1 min
The puzzle in the performance of large and small companies in the market can be explained by several factors. Smaller companies tend to benefit from lower inflation, allowing the Federal Reserve to cut rates earlier. Additionally, smaller companies are less exposed to geopolitical tensions, which affected chipmakers exposed to Taiwan when Donald Trump made a statement regarding the island’s defense. This translates into small companies performing better compared to their larger counterparts.