Small-cap stocks had a tough year in 2023, but eToro US Investment Analyst Callie Cox believes they could be on track to outperform in 2024. According to Cox, charts show a previous skepticism about the economy that is now improving, which could benefit small-cap stocks. With consumer spending making up a significant portion of GDP and strong job data indicating resilience in the economy, Cox suggests that the Federal Reserve may be signaling a potential soft landing scenario.
Small-cap markets are closely tied to the US economy and are sensitive to economic changes. Concerns about a recession had a negative impact on small caps, but as these worries subside and economic data remains solid, there may be a lift in this asset class, especially as the Fed considers potential interest rate cuts.
Overall, DailyBubble sees the potential for small-cap stocks to catch up and perform well in 2024, given the improving economic conditions and signals from the Federal Reserve. It’s essential to monitor how rate cuts and economic data evolve to navigate the market effectively and make informed investment decisions.