Giant technology stocks are “no longer the only game in town”, according to investors who over the past week have moved out of the megacaps that have driven the market rally for years in favour of smaller companies and other previously unloved sectors.
The Russell 2000 small-cap index has jumped 7 per cent since last Thursday, in a dramatic market shift sparked by falling inflation and encouraged by an improving earnings outlook.
Meanwhile, the so-called Magnificent Seven — megacap tech stocks that have dominated the blue-chip S&P 500 index’s gains over the past year, fuelling anxieties about an increasingly lopsided rally — have fallen. The losses, exacerbated by a global sell-off in semiconductor companies, came as the majority of other stocks in the index have climbed, led by sectors such as financials, energy and real estate.