Capital Economics projected today that US equities are set for a rebound, with a particular emphasis on growth and cyclical stocks. This forecast comes after a notable decline in small-cap stocks, as reflected by the index, which experienced a sharper fall compared to its large-cap counterpart, the , following the robust US payroll report released last Friday.
Capital Economics noted that the recent drop in the Russell 2000 index by approximately 3%, which was greater than the S&P 500’s fall of around 2%, mirrors the short-lived market rotation observed in July. Small-cap stocks have shown heightened sensitivity to Federal Reserve policy expectations, which have shifted in response to the enduring strength of the US economy.
The firm expects that the recent downturn in US equities is temporary and predicts a forthcoming recovery. They anticipate that the will decrease slightly, but large-cap growth stocks and those in cyclical…
