As the Russel 2000 index (^RUT) rallied in July, investors braced for a market rotation away from Big Tech and the Magnificent Seven into small-cap stocks. Edward Jones senior investment strategist Angelo Kourkafas joins Catalysts to discuss the latest market volatility (^VIX) and what investors can expect in the second half of 2024.

"The broadening of market leadership will remain a prevalent theme in the remaining months of the year. We have a resilient economy, which means that there is still growth. And we know there's a big valuation gap between the [S&P] 493 and the Magnificent Seven. And when we look at earnings, which is one of the fundamental drivers of stock prices, the gap between the Magnificent Seven and the rest of the market is starting to narrow, especially as we look at Q3 and Q4," Kourkafas explains.

He expects volatility to continue as Wall Street heads into a "seasonally challenged part of the year" and an election season. While volatility may increase closer to the November election, he notes that it historically has quickly subsided. He encourages investors to see upcoming pullbacks as buying and diversification opportunities. While small caps grew considerably in July, Kourkafas favors mid-cap stocks as they have "more exposure to positive economic surprises and has a valuation advantage over large caps."

For more expert insight and the latest market action, click here to watch this full episode of Catalysts.

This post was written by Melanie Riehl