The markets wrapped up August with a tale of two very different stories – while the headline indices posted solid gains for their fourth consecutive winning month, the real action happened beneath the surface. Small-cap stocks exploded higher, the AI darling Nvidia stumbled despite beating expectations, and President Trump's unprecedented firing of Fed Governor Lisa Cook sent shockwaves through Washington. As we head into September – historically the market's worst month – investors are grappling with shifting Fed policy, rotation dynamics, and stretched valuations.
๐ฐ What's Happening
The Small-Cap Renaissance
August delivered a historic performance divergence that few saw coming. While the Nasdaq 100 managed just 1.5% gains, the Russell 2000 small-cap index surged 7.3% – marking one of the most dramatic monthly outperformances since 1985. Interest rate-sensitive small caps benefited from Fed Chair Powell's dovish Jackson Hole speech, which all but guaranteed a September rate cut. This “great rotation”…
