Overview

• The Russell 2000 rose over 1% Wednesday, extending a multi-day rally that has lifted the small-cap benchmark more than 4% this week.
• The CNBC Magnificent 7 index slipped 0.3%, leaving the S&P 500 little changed as mega-cap technology shares paused.
• CME FedWatch readings climbed to near 100% odds for a September rate cut, reflecting growing conviction in imminent Fed easing.
• Bank of America and Morgan Stanley analysts highlight modest small-cap valuations, light investor positioning and reshoring trends as factors that could sustain the rotation.
• Treasury Secretary Scott Bessent urged the Fed to cut rates by up to 1.75 percentage points starting with a 50 basis point move in September, and recent Fed board shifts have intensified political pressure on the central bank.