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5:20 PM ยท 16 October 2024

US2000 gains 1.45% driven by positive sentiment in the regional banking sector ๐Ÿ”Ž

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The US2000 gains 1.45% to 2305 points on Wednesday, reaching its highest level since July and potentially preparing to break out to levels not seen since November 2021. This rally is especially driven by solid performance of financial sector, with the SPDR S&P Regional Banking ETF (KRE) climbing for the fourth consecutive day to its highest levels since March 2023. The KRE ETF gained almost 11% in the first two weeks of October alone. Strong earnings reports from major banks have bolstered investor confidence. Morgan Stanley's stock gains 6.80% after reporting record profits, and U.S. Bancorp is up by 4.30% on better-than-expected net interest income.

Investors are rotating from expensive tech megacaps into less costly small-cap and financial stocks, contributing to the Russell 2000's momentum (US2000). The index jumped 1.45% to a more than two-month high as easing interest rates alleviated capital concerns for highly leveraged smaller companies. The recent improved macroeconomic data also supports investor speculation of a non-recession scenario in the US economy. Of course, such perspective reinforced by interest rate cuts would be best for small-cap companies in the US market.

US2000 (D1 interval)

If the Russell 2000 breaks its July high around 2300 points, it could target a return to its all-time highs above 2450 points from 2021, implying a potential gain of 6.5%

 

Source: xStation 5

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