Wall Street Week Ahead: Investors rethink recession plays, boosting U.S. stock market laggards

For months, investors piled into a handful of megacap companies seen as safe bets in uncertain times, spurring a rally that has lifted the S&P 500 nearly 12% year-to-date,As the U.S. economy holds up despite higher interest rates, fears of an imminent downturn are fading.

"We're seeing indications that the economy is going to be more resilient to headwinds," said Tim Murray, a capital market strategist in T Rowe Price's multi-asset division. "There's reason to believe that the pessimism we saw at the start of the year is giving way to a stronger-than-expected market."

Murray has increased his allocation to small-cap stocks, which tend to be among the most direct beneficiaries of economic growth. The Russell 2000 small cap index of small cap companiesOther rebounding segments in June include the S&P 500 energy sector, which has gained 6% this month and S&P 500 industrials, up 5.7%. Energy is down 7.6% year-to-date, while industrials have risen nearly 4%.

By contrast, the tech-heavy Nasdaq 100 has gained about 2% this month - though the recent underperformance follows a nearly 33% year-to-date surge on excitement over developments inA broadening equity rally would be a welcome development for many investors, who have worried about the market's narrow leadership. Just seven stocks - Apple Inc

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