Small-cap stocks picking up steam, tech leads sector gains amid market melt-up

Yahoo Finance markets reporter Jared Blikre takes a look at how small-cap stocks are moving in the market.

Video Transcript

BRAD SMITH: Welcome back. Let's get some of the market action from the New York Stock Exchange with "Yahoo Finance's" Jared Blikre. Hey, Jared.

JARED BLIKRE: Hey, there. Well, let's talk about small caps. We've seen this huge breakout over the last few days. Three out of the last four days of Russell 2000 has been up more than 2%. We have not seen a string of wins like that, I believe, since late 2020. And that was around the time of the last presidential election. So a lot going on here.

Now, you take a look at the sector action year-to-date on the YFi interactive. You can see tech. That's up over 30%, so as consumer discretionary. That's 23. Right in the middle is communication services up 30%. Aside from that, not a whole lot of participation.

We see energy and utilities down 6%. Now, if I change that to a five-day look, and I'm on a little bit of a lag here, you're going to see the opposite picture where tech is the laggard. And energy and materials-- those are some of the winners there. So a distinct shift in the market. And what happened? Well, we had the non-farm payroll come out last Friday. And it seemed to be a good news report in that traders were taking it as good news is good news.

And that's something we haven't necessarily seen in a while. It's been a lot of bad news is good news. Good news is bad news. Suffice to say, the elements are in play for some more squeezing to the upside here, not only in small caps, but some of the other indices probably at the expense of the NASDAQ and the mega caps. Not that they're over with, but they got a little bit extended too far, too fast. And now, the market is looking for some other places to put the money.

I think this is all well and good, except that the markets have also probably misunderestimated. There is a word from our past. The intentions and the resilience of the Fed to fight inflation a lot is going to hinge on that CPI print next week. If it comes in safe, if it comes in below expectations, maybe even at expectations, markets can probably breathe a sigh of relief.

But if it is hot, boy, it's going to turn the screws on Jerome Powell. So this is a market we're in right now. If you're a retail trader and you're looking at what's going on probably have some FOMO right now, maybe not if you're in GameStop, in particular. But as I said this yesterday or the day before, if you are an institutional money manager, guess what-- and you're not long tech, you're not long the mega caps, you're not long in these favorite stocks, you might as well be short. And those guys are feeling it right now.