Investors shift capital toward value and small-cap stocks

In recent months, financial markets have seen a notable tactical shift.

Investors are moving capital away from the large-cap, technology-heavy stocks that dominated for years, favoring value and small-cap companies instead.

This rotation is driven by several factors, most notably changing interest rate expectations.

Because small-cap firms often rely on external financing, anticipated Federal Reserve rate cuts are expected to lower borrowing costs, boosting their profitability.

Furthermore, valuation plays a major role; after years of large-cap growth dominance, many small-cap stocks appear undervalued by historical standards.

While this trend toward resilience is gaining momentum, it remains a gradual rebalancing rather than a total exit from growth shares.