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The Russell 2000 small cap index (^RUT) saw its biggest decline since 2020 following the Federal Reserve's hawkish pivot, now signaling fewer interest rate cuts planned for 2025. Concerns are now arising around small-cap stocks and whether the asset class still functions as an investor safe haven from volatility.
Envestnet Solutions Co-Chief investment officer Dana D'Auria joins Morning Brief hosts Seana Smith and Brad Smith to talk about small-cap stocks' interest rate sensitivity, calling the category a "tough play" while maneuvering through its own volatility.
Investors seeking out a safe haven could turn to tech stocks for a more defensive route, D'Auria suggests, though warns about the sector's heavy concentration in the market.
"It's really hard to be very far from Big Tech. So I think plowing even more money into Big Tech, kind of exacerbates that concentration issue for you. If you know, the traditional place to sort of sit in the markets, if you want a little bit of padding is something more like defensive, true, defensive, which would be quality indicators" and low volatility indicators.
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This post was written by Josh Lynch.