ETFs across various categories pulled in $22.1 billion in capital last week.
The world's biggest economy's growth accelerated in the second quarter, primarily driven by solid consumer spending and higher business investment despite high interest rates.
Recent economic indicators are helping to make the case for small-cap investing. June's Consumer Price Index (CPI) report dropped by 0.1% for the month, marking the index's first drop since May 2020.
Small-cap stocks moved higher early Tuesday. The Russell 2000 was recently up nearly 1%, outperforming the S&P 500 in morning action.
ETFs across various categories pulled in $49.4 billion in capital last week, pushing the year-to-date inflows to $406.3 billion.
The Russell 2000 small-cap index is up 7.4% in July alone, outpacing the S&P 500. Investors are bullish on the smaller end of the market because interest rates appear likely to fall over the next few months.
Stanley Druckenmiller bought shares of Nvidia before its epic run, but has since reduced his stake and invested in small-cap stocks. There's data to show that small-cap stocks are generally undervalued, but they've quickly shot up in the last month.
ETFs across various categories pulled in $35.8 billion in capital last week, pushing the year-to-date inflows to $406.3 billion.
Small-cap stocks, as indicated by the Russell 2000 Index, have lagged their bigger peers.
The iShares Russell 2000 ETF NYSE: IWM experienced a significant breakout above multi-year resistance last week, sparked by the release of the CPI inflation data on Thursday. This move was one of the most eye-opening events of the week, drawing significant attention to small-cap stocks.
The big keep getting bigger, until they don't. Since nothing grows to the moon, in the markets there always comes a time when momentum reverses sharply, and the unloved become loved and the loved become hated.
Lower inflation means lower interest rates - a bullish sign for small-cap stocks into year-end.