U.S. small cap stocks unlikely to outperform large caps, no matter what, Capital Economics says
Even if concerns that a U.S. economic slowdown will turn into a recession turn out to be unfounded, small cap stocks in the U.S. are unlikely to outperform larger companies, according to Capital Economics chief markets economist John Higgins.
Small cap stocks haven’t rebounded as much as large cap indexes since the market bottom in early April, as shown in equal-weighted indexes that give the same importance to each stock, regardless of their market value, Higgins said. What’s more, small cap underperformance has only been a U.S. phenomenon, not a global one.
Even fading worries about the U.S. economy are unlikely to drive small caps higher relative to large caps, Capital Economics says.
“We suspect the underperformance will continue as enthusiasm for AI grows again. That view is informed by the experience of the dotcom era: the underperformance of [small cap] equities then only ended in mid-1999, the year before the bubble burst,” the researcher wrote.
— Scott Schnipper
Big cybersecurity ETFs close at records
The Amplify Cybersecurity ETF (HACK) and the First Trust NASDAQ Cybersecurity ETF (CIBR) over the past five days
Both ETFs also touched fresh 52-week highs on Monday.
Names lifting the ETFs included CrowdStrike, up about 1.7%; Rubrik, up 4.6%; and Zscaler, up 6.3%.
–Darla Mercado, Gina Francolla
Stocks making the biggest moves after the bell: EchoStar, Credo Technology and more
These are the stocks moving the most in extended-hours trading:
EchoStar — The telecommunications stock popped 5% after EchoStar disclosed that it would not make around $183 million in cash interest payments on a series of Dish’s notes. EchoStar said that this non-payment was made in light of recent uncertainty raised by the Federal Communications Commission.
Pegasystems — Shares added 2% after the software firm raised its full-year earnings guidance to $3.94 per share, ex-items, versus its prior guidance of $3.10 and FactSet’s estimate of $3.40. Pegasystems also updated its full-year revenue guidance to $1.7 billion, up from its previous forecast of $1.6 billion and FactSet’s $1.62 billion estimate.
Credo Technology — The data infrastructure stock soared 13% after reporting fiscal fourth-quarter non-GAAP earnings of 35 cents per share, exceeding the 27 cents per share analysts polled by FactSet had expected. Credo’s $170 million revenue also beat the estimated $159.6 million.
— Lisa Kailai Han
