--- title: Why Slumping Tech Stocks Are Good News for Investors description: As tech stocks continue to sell off, the stock market is showing signs of strength in other sectors with small-cap companies leading the way. authors: - name: Jordan Chussler role: Editor, Investing and Banking url: https://money.com/author/jordan-chussler/ bio: Jordan is an investment editor and CPFC who specializes in traditional equities, gold and other precious metals, retirement savings and income investing. He combines his personal and professional interests in finance and education to help readers increase their financial literacy and make better investment choices. education: Lynn University certifications: Certified Personal Finance Counselor at_money_since: 2023 articles: 130 covers: - Investing - Banking - Credit - Credit Cards - Economy and Politics - Housing - Identity Theft - Insurance - Loans - Mortgages - Personal Finance - Professional Services - Retirement also_seen_in: - Weiss Ratings - 24/7 Wall Street - Better Investing - Yahoo Finance - Nasdaq - Investing.com - Marketbeat - MSN Money social: - https://www.linkedin.com/in/jordan-chussler-b3597811/ editors: - name: Brad Tuttle role: Senior Editor url: https://money.com/author/brad-tuttle/ bio: Brad Tuttle is a former senior editor at Money with over 10 years’ experience covering a vast number of personal finance topics, including careers, cars, travel, budgeting, investing, insurance, credit cards, consumer psychology, real estate, banking, and shopping and deals. education: Columbia University School of Journalism, MS at_money_since: 2014 articles: 366 covers: - Investing - Banking - Business - Career Advice - Credit - Credit Cards - Economy and Politics - Education - Health and Wellness - Housing - Identity Theft - Insurance - Lifestyle - Loans - Mortgages - Personal Finance - Pets - Professional Services - Retirement - Shopping - Taxes - Technology social: - https://twitter.com/bradrtuttle - https://linkedin.com/in/brad-tuttle-834b225 former_staff: true published: '2024-07-19T18:47:06.000Z' modified: '2024-07-19T18:49:35.000Z' section: Investing tags: - News word_count: 566 canonical: https://money.com/tech-stocks-good-sign-bull-market/ type: NewsArticle source: structured-blocks --- > **Disclosure:** We research all brands listed and may earn a fee from our partners. Research and financial considerations may influence how brands are displayed. Not all brands are included. [Learn more](https://money.com/page/disclaimer/). ![A bull with an increasing graph in the background](https://img.money.com/2024/07/News-Bull-Market.jpg) Investors may be jittery about the ongoing selloff in tech stocks, but there's a silver lining: The recent developments actually signify strength for the bull market. This week, the [S&P 500](https://money.com/what-is-the-sp-500-index/)'s tech sector has fallen by -5.20%, with some of the biggest losers being market darlings Nvidia (-8.18%), [Amazon](https://money.com/how-to-buy-amazon-stock/) (-5.20%) and Alphabet (-3.03%). But the fact that shareholders are liquidating their positions in Big Tech doesn't mean the stock market overall is in bad shape. Rather, what we're seeing is a dramatic shift in sector rotation and the rise of small-cap companies, demonstrating a more broad-based bull market that isn't solely reliant on [optimism around AI](https://money.com/ai-for-picking-stocks-beat-market/). ## Want to grow as an investor, no matter your level? ### SoFi® is the investing platform that helps people become better investors. Build your portfolio alongside over a million other community members. [Start Investing](https://money.com/pr/hb325a3303ea?ap_referrer=%2Ftech-stocks-good-sign-bull-market%2F) INVESTMENTS ARE NOT FDIC INSURED • ARE NOT BANK GUARANTEED • MAY LOSE VALUE. Brokerage and Active investing products offered through SoFi Securities LLC, member FINRA / SIPC. ## Small caps join the party While the major indices have been enjoying a banner year, companies with small market capitalizations have largely been left on the sidelines. The [Dow](https://money.com/dow-40k-stock-market/), Nasdaq and the S&P 500 have set dozens of [all-time highs](https://money.com/stock-market-indexes-record-highs/) in 2024, while the small-cap index was only able to muster a gain of 0.83% through the first six months of the year. However, that's all changed over the past several weeks. Since July 1, the Russell 2000 — which tracks the smallest 2,000 stocks in the small cap Russell Index — has gained 7.66%, outpacing every major index. In contrast, over the same period, the Dow is up 2.73%, the S&P 500 has gained 0.69%, and the tech-heavy Nasdaq-100 is *down* -1.30%. This is just one indication that the current bull market is now expanding beyond the so-called [Magnificent Seven stocks](https://money.com/faang-magnificent-seven-tech-stocks/) (Alphabet, Amazon, Apple, Microsoft, Meta, Nvidia and Tesla), which currently account for 31% of the weighted S&P 500. Bank of America's head of U.S. equity and quantitative strategy Savita Subramanian told [Yahoo! Finance](https://finance.yahoo.com/news/small-cap-debate-continues-as-rally-in-russell-2000-stalls-194527842.html) the trend in small caps is "likely to persist." Subramanian noted that many companies in the Russell 2000 are currently undervalued. "Their valuations are at levels that would warrant a pretty equitable comeback," he said. ## Stock market sector rotation Looking at the broader picture, the [S&P 500](https://money.com/best-index-funds/) isn't suffering losses across the board. In fact, of its 11 sectors, only tech is in the red over the past month, having seen losses of $900 billion in market value this week alone. This suggests investors are recognizing that while one sector may be perceived as overvalued, the remainder are seemingly undervalued — and worth buying. This trend of inflows into value stocks in sectors like financials, energy and real estate could persist as the likelihood of a September [rate cut](https://www.cmegroup.com/markets/interest-rates/cme-fedwatch-tool.html) (currently pinned at 98.1%) by the Federal Reserve continues to gain momentum. Over the past month, those three sectors have seen gains of 4.89%, 5.36% and 5.41%, respectively. So far this week, the biggest winners in those sectors are Equity Residential (3.66%), Capital One (4.31%) and oilfield services provider Schlumberger (6.84%). This sector rotation into value stocks and the simultaneous rise of small caps is evidence that the current bull market — which began in earnest in October 2022 — is gaining broad-based strength and isn't being solely propelled by overinflated AI and tech stocks. Ultimately, this is a sign of strength that can provide buy-and-hold investors — including even those with holdings in tech — a bit of relief. ## Time in the market beats timing the market ### The brokerage you choose matters. Try SoFi®, the investing platform helping people become better investors. See what makes us different. [Start Investing](https://money.com/pr/dc493b2a487b?ap_referrer=%2Ftech-stocks-good-sign-bull-market%2F) ![](https://s3.consumersadvocate.org/prd/image/image/20107/medium_fab74697-be3e-49a4-8040-ea434cb0e5c3.png) Become a better investor with SoFi® [Start Investing](https://money.com/pr/v42ab7f4acf9?ap_referrer=%2Ftech-stocks-good-sign-bull-market%2F) ```json { "@context": "https://schema.org", "@graph": [ { "@type": "BreadcrumbList", "@id": "https://money.com/tech-stocks-good-sign-bull-market/#breadcrumb", "itemListElement": [ { "@type": "ListItem", "position": 1, "name": "Home", "item": "https://money.com" }, { "@type": "ListItem", "position": 2, "name": "Investing", "item": "https://money.com/investing/" }, { "@type": "ListItem", "position": 3, "name": "Stock Market", "item": "https://money.com/stock-market/" }, { "@type": "ListItem", "position": 4, "name": "Why Slumping Tech Stocks Are Good News for Investors" } ] }, { "@type": "WebSite", "@id": "https://money.com/#website", "url": "https://money.com", "name": "Money", "publisher": { "@id": "https://money.com/#organization" } }, { "@type": "WebPage", "@id": "https://money.com/tech-stocks-good-sign-bull-market/#webpage", "url": "https://money.com/tech-stocks-good-sign-bull-market/", "name": "Why Slumping Tech Stocks Are Good News for Investors", "isPartOf": { "@id": "https://money.com/#website" }, "datePublished": "2024-07-19T18:47:06.000Z", "mainEntity": { "@id": "https://money.com/tech-stocks-good-sign-bull-market/" }, "inLanguage": "en-US", "breadcrumb": { "@id": "https://money.com/tech-stocks-good-sign-bull-market/#breadcrumb" }, "dateModified": "2024-07-19T18:49:35.000Z" }, { "@type": "NewsArticle", "headline": "Why Slumping Tech Stocks Are Good News for Investors", "articleSection": "Investing", "image": [ { "@type": "ImageObject", "url": "https://img.money.com/2024/07/News-Bull-Market.jpg", "width": 2880, "height": 1920, "caption": "News-Bull-Market" } ], "author": [ { "@type": "Person", "name": "Jordan Chussler", "url": "https://money.com/author/jordan-chussler/", "@id": "https://money.com/author/jordan-chussler/#author", "description": "Jordan is an investment editor and CPFC who specializes in traditional equities, gold and other precious metals, retirement savings and income investing. 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