The iShares Russell 2000 ETF (IWM) crashed hard after the Federal Reserve delivered a highly hawkish interest rate decision. It slumped by over 3%, reaching a low of $218, its lowest level since November 5.
The final trades of the day with CNBC's Melissa Lee and the Fast Money traders.
Trump's reelection and his pro-business policies are expected to boost the M&A market, directly benefiting Russell 2000 companies. The Russell 2000 is trading below its historical P/E average, making it the only US index currently at a significant discount. The iShares Russell 2000 ETF offers great diversification and is ideal for capturing the growth of small American companies.
The 2025 Wall Street outlook is marked by contrasting views. While investment house Stifel expects a bearish year due to economic and inflationary pressures, others remain optimistic.
Small cap stocks, represented by the iShares Russell 2000 ETF, have shown positive returns, but face significant risks and challenges heading into 2025. IWM's sector allocation is diverse, with no single stock dominating, but lacks long-term appeal due to its underperformance compared to large caps. Valuation metrics for IWM are reasonable, but market sentiment and technical analysis suggest limited potential for outperformance.
The final trades of the day with CNBC's Melissa Lee and the Fast Money traders.
Small cap stocks, represented by the Russell 2000, have surged post-election, benefiting from domestic focus and potential regulatory and tax reforms under President Trump. Small caps are riskier but offer higher potential upside; ETFs like IWM and UWM provide diversified exposure. IWM, with a lower expense ratio, is ideal for long-term small cap exposure, while UWM suits short-term, bullish momentum plays.
Bullish momentum, expanding breadth, and a dovish Federal Reserve board are three reasons for investors to remain bullish stocks into year-end.
The stock market has surged over the last two years, driven by the artificial intelligence (AI) boom, falling inflation, and a resilient economy in the face of high interest rates.
The iShares Russell 2000 ETF (IWM) continued its strong rally, reaching a record high of $244.8 this week. It has jumped by over 51% from its lowest level in 2023 as the American economy avoided a hard landing.
ETFs pulled in $45 billion in capital last week, with U.S. equity ETFs leading the way.
We're certainly seeing some selling pressure as markets cool off, with the latest rally taking a breather amid signs of profit-taking.