(Bloomberg) — Wall Street traders betting the Federal Reserve will be able to cut rates soon sent bond yields tumbling — while driving a rotation out of the tech megacaps that have powered the bull market in stocks.
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Further signs that inflation is slowing down fueled speculation the Fed will be able to move as early as September. Optimism over lower rates sparked a shift into riskier corners of the market — as money exited the long-favored safety trade of big tech. The Russell 2000 of smaller firms beat the Nasdaq 100 by 5.8 percentage points — the most since November 2020. While the S&P 500 fell nearly 1%, almost 400 of its shares went up.
To Callie Cox at Ritholtz Wealth Management, today could be a turning point for markets. It’s also a good reminder that diversifying is important.
“The big tech trade is turning on itself, yet the rest of the market is finally stepping in,” Cox said. “The S&P…
