Small-Cap Stocks Eye Potential Rebound in 2024 After Tough 2023
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Small-cap stocks had a rough start in 2024 but could rally later this year according to Tom Lee who expects the Russell 2000 index to reach 3,000 points.
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Small-caps struggled in 2023 due to rising rates and recession risks but got a 4th quarter lift on optimism about potential Fed rate cuts.
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Traders have scaled back expectations for Fed rate cuts after better economic data and hawkish Fed comments in 2024.
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Small-caps remain attractive trading at a steep valuation discount relative to large caps per Lee.
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BofA Strategists also expect small-caps to outperform in 2024, historically a strong year for them given tendencies around election cycles.