The rising small-cap stocks in the US stock market are being poured cold water on. Morgan Stanley commented that "the momentum is insufficient"

Recent strong performance of US small-cap stocks has been affected by technical resistance and a lack of long-term fundamental driving factors. The Chief US Stock Strategist at Morgan Stanley stated that despite small-cap stocks being driven by trader demand and short covering, there is a lack of rationality in terms of earnings. They believe that growth-oriented stocks have the best prospects, estimating that these stocks' valuations will benefit from the Fed rate cuts, but their revenue streams will be less affected by the rate cuts. A strategist at Bank of America mentioned that last week, inflows into small-cap funds hit the second-highest historical record, with the Russell 2000 Index reaching its highest level in over two years