Benign US inflation could support stock market laggards

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Signs of falling U.S. inflation on Wednesday and growing hopes for interest rate cuts from the Federal Reserve could be a positive signal for large swathes...

FILE PHOTO: Federal Reserve Chair Powell testifies on Capitol Hill in WashingtonNEW YORK - Signs of falling U.S. inflation on Wednesday and growing hopes for interest rate cuts from the Federal Reserve could be a positive signal for large swathes of the stock market that have languished in a rally led by Big Tech.

Though the S&P 500 is up about 14% this year, about 60% of the return has been driven by six companies whose shares have an outsized weighting in the index: Nvidia, Microsoft, Apple, Meta Platforms, Alphabet, and Amazon.com, data from S&P Dow Jones Indices showed. One such episode came in the final months of last year, when small caps soared on expectations the Fed was done cutting rates. The small cap-focused Russell 2000 gained 13.6% in the final quarter of 2023, compared to an 11.2% gain for the S&P 500."The Fed doesn't even need to cut in July as we expect, it just needs to be heading towards that rate cut cycle, if youwill, and that should contribute to broadening performance,"Luke Tilley, Chief Economist at Wilmington Trust.

To be sure, investors were sticking with some of this year's winners too. Technology, the best performing S&P 500 sector this year, was up 2.9% on the day, including gains of more than 4% each for Nvidia and Apple.This dividend stock has a strong history of dividend payments and growth, but offers even more for long-term investors. The post This 8.1% Dividend Stock Pays Cash Every Month appeared first on The Motley Fool Canada.

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