US equities advanced, with the S&P 500 rising 0.6% and the small-cap Russell 2000 index outperforming with a 1.8% gain, according to Danske Bank analysts. This strong performance by small caps is notable given the prevailing perception of a narrow, tech-led rally, with small caps up 16% year-to-date compared to the S&P 500's 10% gain [1]. Analysts highlight that despite a shift in consensus from expectations of rate cuts to potential rate hikes in recent months, small caps remain attractive due to improving earnings and favorable valuations [1].
The Danske Research Team points out that while technology stocks have dominated attention during the latest earnings season, the remainder of the S&P 500 ('S&P 493') delivered the strongest earnings growth since 2021. They suggest that macroeconomic conditions could support even higher earnings growth ahead for these companies [1].
Momentum stocks had a particularly strong session, climbing 3.4% in a single day, with technology leading the charge. Micron Technology surged 19% after UBS tripled its price target, fueling continued enthusiasm for chip stocks [1]. In Asia, the chip rally extended, with South Korea's Kospi index up 4%. Samsung was a standout, having reached a deal with workers and averting an 18-day strike, which analysts note is positive news as a strike could have exacerbated chip shortages [1]. US and European equity futures were reported to be slightly higher in early trading [1].
CONCLUSION
US equities saw broad gains, with small caps outperforming amid improving earnings and attractive valuations. The technology sector, particularly chip stocks like Micron and Samsung, drove momentum, supported by positive earnings and labor developments. Market sentiment remains upbeat, with futures pointing to continued strength.