According to a recent report, small caps and retail have been making something of a comeback in the stock market. This is a welcome development for investors who had been feeling lost in the ever-volatile stock market. The rise of small caps and retail has been buoyed by strong economic data that makes it easier for companies to raise capital.
In recent days, stock market participants have been keeping a close eye on small caps and retail. These sectors of the market had been weakening for a while. However, recent data from the National Bureau of Economic Research shows that the economy grew at a 3.2% rate in the final quarter of 2020. This was a strong showing and came on the heels of a 4% growth rate in the third quarter of the year.
The rise of small caps and retail in the stock market has been remarkable. These stocks have outperformed their larger counterparts by a wide margin. Small caps have risen in the past one month by about 10%, while the Dow Jones industrial average has advanced by only 2%. Similarly, retail stocks have risen by 11% in the past one month, while the S&P 500 has surged by 8%.
As the economic data continue to beat expectations, small caps and retail are expected to continue to see strong demand. These stocks continue to benefit from the growth in consumer demand, which has been fueled by the government’s stimulus packages. This is why they are an attractive option for investors who want to take advantage of the strong uptrend in the stock market.
Overall, small caps and retail are holding the line in the sand. This is in the face of extreme volatility in the stock market. Investors should keep a close eye on this sector as it is expected to continue to drive returns in the months ahead.