Small-cap stocks still look cheap after big July rally, Vanguard CIO says

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Vanguard president and CIO Greg Davis spoke to CNBC's Bob Pisani about the market environment and the outlook for Federal Reserve rate cuts.

The recent rally for small-cap stocks could still have room to run due to a valuation gap and the economic environment, according to the top investor at asset management giant Vanguard. Greg Davis, the firm's president and CIO, told CNBC's Bob Pisani that the small-cap rebound makes sense from a valuation standpoint and could keep going. "Small caps, to us, still look relatively cheap — relative to some of the large-cap alternatives that are out there," Davis said.

Davis said that while the market does look top-heavy, it has not reached the levels of some historical periods and that investors could look beyond the S & P 500 to dilute that risk. "What we try to tell investors is that you can get broader diversification looking at the total market," he said. Politics and policy will become key market factors in the back half of the 2024, for both small caps and equities more broadly.

 

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