Wall Street Week Ahead: Investors rethink recession plays, boosting U.S. stock market laggards

A broadening equity rally in the US is underway, expanding beyond mega-cap companies and into small caps, energy shares and industrial stocks, resulting in the rise of the S&P 500 nearly 12% year-to-date. Investors, repositioning portfolios primed for a widely-expected recession, are beginning to reap the rewards of increased allocation to economically sensitive markets. This development may ease worries of the market’s narrow leadership, previously dominated by just seven mega-cap companies, some of which will have contributed to the majority of the index’s gains for 2021. The resurgence in small cap companies has also seen the Russell 2000 small cap index rise by 6.6% this month alone.

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