Could Earnings Stop the Small-Cap Stocks Rotation in Its Tracks? [Video]

The Magnificent Seven soared on Monday ahead of a slew of earnings reports that could shake up the small-cap rotation that hammered the market’s leading stocks last week.

Shares of Nvidia (NVDA) and Tesla (TSLA) each gained around 5%, while Meta (META) and Alphabet (GOOGL) both advanced more than 2%.

Equity markets have been turned on their head in recent weeks amid a shift in expectations for U.S. monetary policy. In the week ending July 17, the small-cap Russell 2000 outperformed the tech-heavy Nasdaq 100 by more than 13.4 percentage points, the Russell’s biggest seven-day stretch of outperformance since 2001 and the third-largest on record.

Optimism that the Federal Reserve will cut interest rates soon got a boost earlier this month when data showed inflation fell more than expectedto 3% in June. Market participants see a greater than 90% chance the Fed will lower its benchmark federal funds rate by …