The recent surge in small-cap stocks may not be over yet, according to DataTrek Research. The 11.5% increase in small-cap stocks has caught the attention of investors, with co-founder Nicholas Colas noting that similar returns have historically only occurred during major market lows, bear market rallies, or significant blips in longer bull markets. However, the current surge does not fit any of those descriptions, leading Colas to believe that there is more room for growth.
Meanwhile, housing data for June exceeded expectations, with new construction starts totaling 1.353 million and building permits reaching 1.446 million. This positive data indicates a strong housing market, with both permits and starts revised higher from May.
In premarket trading, chip stocks and Five Below experienced significant movements. Semiconductor stocks, including Nvidia, Taiwan Semiconductor, and AMD, declined following reports of potential trade restrictions. Five Below saw a sharp decline after lowering its second-quarter outlook and announcing the departure of its CEO.
Gold miner stocks have been on the rise this week as the price of gold reaches new highs. The VanEck Gold Miners ETF (GDX) has seen a 2.5% increase this week, with Harmony Gold, DRDGold, and SSR Mining leading the rally.
Small caps are expected to retreat after a five-day run, with the iShares Russell 2000 ETF (IWM) dipping in premarket trading. The Russell 2000 index reached its highest level since January 2022 during Tuesday’s session, fueled by hopes of interest rate cuts benefiting small-cap stocks.
Novo Nordisk and Eli Lilly shares dropped after Roche shared positive trial data for its obesity drug candidate. Roche’s experimental pill showed promising results in early-stage trials, leading to a decline in shares of competing companies.
Overall, the market remains dynamic with various sectors experiencing both gains and losses, reflecting the ongoing shifts in investor sentiment and economic conditions.
