EasyAssetManagement talks about the significant surge in small-cap stocks on July 11th, with a 4.4% increase marking the largest single-day gain since 2008.
On July 11th, small-cap stocks experienced a significant surge, outperforming large-cap equities by a substantial 4.4%. This marked the largest single-day relative gain for small caps since 2008 and the greatest absolute increase since November of the same year. The rally was primarily attributed to a decline in Consumer Price Index (CPI) data, which fueled expectations of an impending Federal Reserve interest rate cut.
Historically, instances of small caps outperforming large caps by over 3% have been followed by subsequent gains for both segments. Since 2000, there have been eight such occurrences, resulting in average one-month post-event returns of 8% and 6.5% for small and large caps, respectively.
Small-cap stocks have faced several challenges in recent years, including the 2021 SPAC bubble burst and a dearth of initial public offerings (IPOs). However, the potential for easing interest rates may provide a much-needed catalyst for a small-cap recovery.
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