A Major Disconnect is Happening in the US Stock Market

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Small-cap stocks may finally be approaching a turning point after years of underperformance against large-cap giants. Despite the long-term dominance of mega-cap companies, small businesses remain vital to the economy and are beginning to show signs of renewed strength. Profit margins for the S&P 600 have started to improve, inflation pressures are easing, and the Federal Reserve has shifted to interest rate cuts after years of tightening. Business sentiment is also turning positive, with new applications for small businesses on the rise. While valuations for small caps remain deeply discounted compared to the S&P 500, the path forward is still uncertain, as these companies are more sensitive to economic fluctuations and market volatility.

This video explores the catalysts behind the potential small-cap breakout, the historical context of market concentration, and what investors should watch as capital flows may begin to rotate. This content is for informational purposes only and should not be considered financial advice. Always conduct your own research before making investment decisions.

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