Wall St Week Ahead Amid banking woes, faltering US small-caps offer ominous economic sign

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Wall St Week Ahead Amid banking woes, faltering US small-caps offer ominous economic sign
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A U.S. stocks rally is leaving behind smaller companies, a sign that investors may be bracing for economic turmoil ahead.

inverted U.S. Treasury yield curve

Investors are "trying to position their portfolios for what they think is going to happen in the economy," said Eric Kuby, chief investment officer at North Star Investment Management, which specializes in small caps. "Small caps being out of favor is another signal that investors are bracing themselves for an impending recession."Small caps have tended to waver ahead of economic weakness in the past.

At the same time, investors worry that banking instability will hurt smaller U.S. companies that rely on loans from regional banks, which have been at the center of the recent crisis.

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