Why small-cap stocks are attractive to investors

As a market rotation occurs from out of the tech sector and Magnificent Seven earnings weigh on the broader market on Wednesday, Citi Head of US Equity Strategy Scott Chronert joins Market Domination to discuss current market dynamics.

Chronert identifies three main “forces at work in the market”: the growth of the AI trade influencing the broader market, potential policies that could impact markets depending on the election outcome, and the market beginning “to discount something akin to a soft landing” scenario.

In light of these factors, Chronert highlights small-cap stocks as an attractive area for investors. “What we’re focused on is the earnings growth set-up. Small cap earnings have been down to flat for the past two years, right now consensus expectations are for small cap… indices to move materially higher next year,” Chronert tells Yahoo Finance.

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