The current market trend is characterised by a prolonged bullish phase, with small-cap stocks outperforming after an extended period of underachievement.

However, a period of consolidation is evident among the leading tech conglomerates, commonly referred to as the ‘Magnificent 7’, due to profit realisation and market normalisation.

Historically, the latter part of the year has presented challenges for the S&P 500. Nevertheless, the current year’s presidential election cycle and the index’s significant year-to-date gains introduce the possibility of continued upward momentum.

Market sentiment, as reflected in index futures, indicates cautious optimism as investors brace for a week filled with corporate earnings releases and a crucial Federal Reserve meeting.

The performance of tech behemoths, including Microsoft, Apple, Amazon, and Meta, will be instrumental in shaping market direction, particularly for stocks that have recently experienced price declines.

Wall Street maintains a cautiously optimistic outlook ahead of the Federal Reserve’s monetary policy decision, with expectations of a potential interest rate reduction in September.

To mitigate investment risk, a diversified portfolio spanning various sectors and asset classes is imperative. This approach not only reduces exposure to specific asset concentrations but also enhances resilience in a dynamic market environment.

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