Traders work on the floor of the New York Stock Exchange during morning trading on December 13, 2023 in New York City.
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The market also continued its rotation into small-cap stocks, with the Russell 2000 rising 1.8% during Monday’s session. Tom Lee, the head of research at Fundstrat Global Advisors, thinks that last week’s big gains for the small-cap index marks just the beginning of a longer rotation. The Russell 2000 posted a 6% gain last week.
“That rally that started last week for small caps is going to be larger than the October to December rally of last year that was over eight weeks and almost a 30% gain for the Russell 2000,” he said on CNBC’s “Closing Bell: Overtime.”
Lee said that small-cap stocks look comparatively more oversold, with valuations even lower this time around.
“We think that this move could be something like 10 weeks and as much as 40%,” he added, noting that the monthly decline in June’s consumer price index reading is giving small-cap stocks “the green light” to rally.
