Wall Street’s Broadening Trade Pressures Index-Tracking Billions
- Big rotation on Thursday spurred tech rout as small caps rose
- The risk is that the megacap stocks correct, says Matt Maley
One thing’s for sure: Investors have tanked up on tech bets en masse, meaning just a modest shift into riskier equities could change the trading game on Wall Street ahead.
Photographer: Michael Nagle/BloombergThis article is for subscribers only.
A long-coveted broadening of the great stock rally would be good news for a slew of active managers and macro bulls. Yet for investors who’ve been lavishing billions of dollars on index-tracking vehicles — year after year — it threatens pain along the way.
Take Thursday. After a fresh flurry of bets emerged that Federal Reserve Chairman Jerome Powell will cut interest rates, the equity market got a jolt as stocks staged a risk-on rotation.