Hey there!

Welcome to The Investing Authority Newsletter.

Join our savvy investors sharing weekly market forecasts and recaps, delivered straight to your inbox. If you want to stay ahead of the trends be sure to subscribe now and be part of the action!

The Investing Authority specializes in helping companies enhance their visibility within the investment community through marketing, advisory, and partnership services. See more Here.

This Week’s Market Forecast… 📊

Small caps hit a record high this week for the first time in over three years, fueled by the Federal Reserve’s decision to begin its rate cutting cycle. These companies are often the most sensitive to interest rate shifts because they rely more heavily on debt to finance growth. Lower borrowing costs improve their balance sheets, open the door to expansion, and make their earnings less pressured by financing expenses.

There is more to this story than rate relief. Small caps tend to reflect the health of the domestic economy more than their large cap peers, which are often global giants with diverse revenue streams.

A breakout in small caps suggests investors are gaining confidence in the resilience of US growth. Historically, periods following the first Fed cut have delivered outsized returns for small cap indices as liquidity conditions ease and risk appetite broadens beyond the mega cap trade.

Valuations add another tailwind. Relative to large caps, small caps still trade at a steep discount and by some measures are near their widest gap in decades. That discount combined with the Fed’s policy shift sets up a compelling case for reallocation.

For investors who have been overweight large cap technology and growth, this may be an opportune time to diversify into small caps and capture both the valuation gap and the cyclical upside.

The Fed’s move marks a turning point. If this cutting cycle continues, the return of small caps may not just be a headline. It could be the market’s next defining trend.

Have a wonderful week!!

Top ETFs on our Radar… 📈

The iShares Expanded Tech-Software Sector ETF has performed exceptionally well this year. Software companies have shown strong performance as investors seek to identify the next big winner in AI.

Tune in every Monday and Friday for in-depth Market Analysis, Recaps, and a featured Stock & ETF.

Thanks for reading and have a great week!

-Ryan

@Theinvestingauthority