Thursday was a historically strange day in the stock market. That may be good news

Thursday was a historically strange day in the stock market. That may be good news


Traders work on the floor at the New York Stock Exchange (NYSE) in New York City, U.S., June 24, 2024. 

Brendan McDermid | Reuters

Wall Street saw a dramatic shift in market trends on Thursday, with winning and losing stocks swapping places for a day. It may turn out to be just what the rally needs to keep going.

The Russell 2000 small-cap index, which has struggled to find its footing all year, jumped more than 3% on Thursday. At the same time, every stock in the so-called “Magnficient 7” fell, including a nearly 5% decline for Nvidia and a 2% drop for Apple, which dragged down both the S&P 500 and Nasdaq Composite.

Bespoke Investment Group shared two statistics on the social media site X to demonstrate how rare it is to have that type of split.

  • Thursday was just the second day since 1979 when the Russell 2000 rose more than 3% while the S&P 500 declined.
  • The Nasdaq Composite was underperforming the Russell 2000 by 4.9 percentage points, the second-biggest daily gap on record. The other time came in November 2020, right after Pfizer shared positive results from a Covid-19 vaccine trial.

And while the major market averages and many individual 401k accounts may show a decline for the day, this odd set of results could be a positive sign for the market. Much of the recent rally has been driven by large tech companies, leading investment pros to worry about a narrow group of stock market leaders.

“Today’s an important day,” Ed Yardeni of Yardeni Research said on CNBC’s “Closing Bell. “This is the day where investors are starting to rotate out of the Magnificent 7 into the rest of the market. I don’t think this is going to continue to pull the S&P 500 down — I think there’s going to be enough money to keep the leading stocks that have done so well fairly elevated, but I think we are going to see more gains in the S&P 493, as well as in the small and mid-cap stocks,” he added.

The split trading came after the June report for the consumer price index early Thursday showed headline inflation declined last month and is now up about 3% over the past year. That bolstered confidence that the Federal Reserve will begin to cut interest rates as soon as September. Fed Chair Jerome Powell indicated in Congressional testimony this week that the central bank was aware that holding rates high for too long could hurt the economy.

The rate cut feels like it's really coming, says Ed Yardeni

“Investors are rotating: They’re jumping from the large-cap tech lily pad on to the mid- and small-cap pads, along with real estate,” said Sam Stovall, chief investment strategist at CFRA Research, told CNBC. “They had been waiting for maybe not a guarantee, but certainly a confirmation that the Fed is likely to start to cut interest rates, and will be doing so not in reaction to a recession.”

Activity in the bond market supports this idea. Yields on U.S. Treasurys were down across the board on Thursday, meaning government bond prices were rallying.

“You’ve got positive CPI on the back of a slightly dovish Powell,” Ross Mayfield, investment strategy analyst at Baird, told CNBC. “Rates are down big, and you have kind of a rotation trade. But the problem with the market being so concentrated in big tech is that that rotation trade can look like a surface level negative. And I think we’re seeing some of that today,” he said.

To be sure, there have also been signs in recent months that the U.S. economy is softening. A slow growth or recessionary environment would be tough for small cap stocks, which tend to be more economically sensitive and domestically-oriented than larger companies.

— CNBC’s Sarah Min and Alex Harring contributed reporting



Source

The number of ‘tariff’ mentions soar past ‘AI’ on earnings calls as Trump’s trade fight alters outlook
World

The number of ‘tariff’ mentions soar past ‘AI’ on earnings calls as Trump’s trade fight alters outlook

Move over artificial intelligence. There’s a new hot topic on corporate earnings calls in 2025: tariffs. The word “tariffs” has come up on more than 350 earnings calls of S & P 500 -listed companies reporting first quarter results, according to a CNBC analysis of call transcripts compiled by AlphaSense. By contrast, the term “AI” […]

Read More
First Chinese freight ship goods hit with Trump’s 145%-plus tariffs arriving at U.S. ports
World

First Chinese freight ship goods hit with Trump’s 145%-plus tariffs arriving at U.S. ports

Container ships sit docked at the Port of Los Angeles on May 06, 2025 in San Pedro, California. Justin Sullivan | Getty Images News | Getty Images The first shipping containers carrying Chinese products that are subject to President Donald Trump’s 145% tariffs have begun arriving in U.S. ports. Seven ships carrying upward of 12,000 […]

Read More
This consumer products stock is rushing to leave China and Wall Street is betting it can pull it off
World

This consumer products stock is rushing to leave China and Wall Street is betting it can pull it off

Wall Street is optimistic SharkNinja will be able to move its sourcing completely out of China. The company, which manufactures appliances such as vacuums and the Ninja Creami ice cream maker, rallied nearly 13% on Thursday following a first-quarter earnings beat. SharkNinja raised its guidance for its fiscal-year earnings, revenue growth and adjusted EBITDA estimates. […]

Read More