US economy charges into the second half of the year
GDP grew at a 2.8% annual pace in Q2, much better than an expectation of 1.9%.
After a sluggish start to the year, the US economy showed a surprising burst of strength in the second quarter, as robust activity among businesses and consumers buttressed an ongoing stream of government spending.
The health of the US economy is of no small concern for the small capitalization stocks that are having a bit of a moment while the massive tech giants that were AI-driven darlings for most of 2024 hit a pothole. (Small caps tend to rely more on American revenues rather than sprawling global business empires.)
That dynamic continues to play out on Thursday, with key gauges of small caps like Russell 2000 (see the iShares Russell 2000 ETF and the S&P Small Cap 600 (easy to track via the S&P Core Small-Cap ETF) up tidily. Meanwhile, tech-heavy indexes like the SPDR S&P 500 ETF and Nasdaq 100 (Invesco QQQ Trust) are taking another leg lower amid a minor crisis of confidence about whether this whole AI thing that companies are spending so much money on may end up as what oil field roughnecks call a dry hole.
