Stock Market Today: Live Updates

The recent move into small-cap stocks may not be losing steam just yet.

The iShares Russell 2000 ETF (IWM) rose about 0.9% in premarket trading, suggesting the market's broad rotation into smaller-cap stocks may continue this week. The Russell 2000 index of small-cap stocks closed up 3.5% last week and is up 12% over the past month.

Fueling the rotation are expectations that central banks will soon cut interest rates, and that an improving interest rate outlook and inflation environment will boost small caps and other cyclical sectors that tend to have higher funding costs.

Pia Singh

According to market history compiled by Sam Stovall, the S&P 500's decline from its all-time high hit on July 16th may not be over yet.

From last week's peak to trough, the S&P 500 fell a total of 4.7%, according to CFRA's chief investment strategist. Since 1990, 68% of declines of 4.5% or more have reversed within “a few weeks,” Stovall wrote in a Monday note. The strategist defines a pullback as a drop between 5% and 9.9%.

Oppenheimer strategist John Stoltzfus said the prospect of an extended rally in large technology stocks was becoming more realistic after last week's volatile market.

The S&P 500 and Nasdaq Composite fell last week, while the small-cap Russell 2000 and Dow Jones Industrial Average rose.

“Rather than investors abandoning the dominance of the 'Magnificent Seven' or big tech stocks over market performance, what appears to be a realistic recognition by market participants that the next upswing will require a broader, less concentrated approach for stocks to rally as the Fed moves closer to cutting interest rates,” he said in the note.

Fred Imbert

The Federal Reserve's Federal Open Market Committee meets on Tuesday and Wednesday, but markets are not expecting a rate cut this week.

Traders in the CME Federal Funds futures market are estimating there is roughly a 96% chance that the central bank will keep rates steady at this meeting, according to CME's Federal Funds Watch tool.

However, traders largely expect one rate cut at the September meeting.

Jesse Pound

The New York stock market was calm as of 6 p.m., with Dow futures up about 50 points.

Jesse Pound