U.S. Midterm Elections Shift Focus to Small and Mid-Cap Stocks

U.S. small and mid-cap stocks are emerging as a favorable investment option ahead of the midterm elections, according to Bank of America strategists. According to Jin10, the team led by Michael Hartnett highlights that U.S. President Donald Trump's aggressive measures to lower prices in energy, healthcare, credit, housing, and electricity sectors are putting pressure on major energy companies, pharmaceutical firms, banks, and large tech corporations. This shift is making small and mid-cap stocks the primary beneficiaries of the current economic boom. Investors are increasingly moving funds away from tech stocks due to concerns over the impact of artificial intelligence, seeking opportunities that may benefit from the Trump administration's efforts to reduce living costs. Additionally, companies more sensitive to improvements in economic growth prospects are outperforming the broader market. Bank of America notes that the transition from 'light asset' to 'heavy asset' business models poses a significant threat to the market dominance of the 'big seven' tech giants.