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More stocks are joining the gangbusters rally. That’s good news for investors

right here. You can listen to an audio version of the newsletter by clicking the same link. New York CNN  —  The dwindling ranks of the Magnificent Seven are finally getting reinforcements. The S&P 500, Dow Jones Industrial Average and Nasdaq Composite indexes notched record highs on Wednesday and Thursday after the Federal Reserve reiterated its forecast for three quarter-point rate cuts in 2024. Investors had worried that the central bank would adjust its expectations to fewer than three cuts following a slate of hot inflation data in recent months. But more stocks than just Big Tech have paved the way higher. The S&P 600 index, which tracks American small-cap stocks, just turned positive for the year. That’s good news for Wall Street, because smaller companies generate most of their revenue from US customers, making them bellwethers of the US economy. Small caps are often active in sectors like financials and industrials that tend to rise and fall with wider economic activity. “When you see small-cap industrials leading, that’s usually a sign that the market is saying things are on pretty firm footing here,” said Ryan Detrick, chief market strategist at Carson Group. Their participation also shows that the market’s surge is extending beyond tech giants. That’s a welcome sign for investors, since a broader rally begets a healthier rally. When the market’s gains don’t depend on just a handful of names, they’re less vulnerable to pullbacks. The rally had already begun broadening in recent weeks, before the Fed-induced euphoria. Some investors say that’s because corporate earnings beats coupled with strong economic data have renewed hopes for a soft landing, or a scenario in which the Fed brings inflation down to its 2% target without triggering a recession. About 93% of S&P 500 companies have posted fourth-quarter results, and 78% have beat earnings expectations, according to Ned Davis Research data through March 19. “Recession” was mentioned in 47 fourth-quarter earnings calls of S&P 500 companies, the lowest count since 2021, according to FactSet data through March 7. In contrast, “soft landing” was cited on 37 earnings calls, the highest number of companies mentioning the term going back at least three years. Meanwhile, jobs data in recent months shows that the labor market is staying resilient against interest rates hovering at a 23-year high. That has led stocks to continue soaring after last year’s powerful rally, even though shares of Tesla and Apple have fallen, while Alphabet has lagged the double-digit percentage gains notched by Magnificent Seven peers Nvidia, Microsoft, Amazon and Meta. Still, Detrick says that a 5% to 7% selloff wouldn’t be worrisome: “Just enough to shake out those johnny-come-lately weak hands … because [the rally is] almost too easy,” he said. Wall Street could also be getting too ahead of itself by expecting such a rosy outcome for the economy, some investors say. “It’s going to be important for investors to ascertain what expectations that have been embedded are realistic and which expectations are a little bit too optimistic,” said Jeffrey Schulze, head of economic and market strategy at ClearBridge Investments. Apple sued in a landmark iPhone monopoly lawsuit The US Justice Department and more than a dozen states filed a blockbuster antitrust lawsuit against Apple on Thursday, accusing the giant company of illegally monopolizing the smartphone market, report my colleagues Brian Fung, Hannah Rabinowitz and Evan Perez. It’s the largest in a recent string of Big Tech companies to face antitrust complaints from the US government, which is cracking down on the massive industry, whose power has gone largely unchecked over the past several decades. The complaint, said Attorney General Merrick Garland at a news conference, alleges that ”Apple has maintained monopoly power in the smartphone market not simply by staying ahead of the competition on the merits but by violating federal antitrust law.” “Consumers should not have to pay higher prices because companies break the law,” he added. The long-anticipated lawsuit, which was filed in the US District Court for the District of New Jersey, comes after years of allegations by critics that Apple has harmed competition with restrictive app store terms, high fees and its “walled-garden” approach to its hardware and software: Apple famously makes its tech easy to use, but it achieves that by tightly controlling — and in some cases, restricting — how third-party companies can interact with the tech behemoth’s products and services. In some cases, Apple may give its own products better access and features than its competitors. The company said it denied the lawsuit’s allegations and would fight them and added that the lawsuit could empower the government “to take a heavy hand in designing people’s technology.” But Garland on Thursday said Apple’s actions have wide-ranging effects. “Monopolies like Apple’s threaten the free and fair markets upon which our economy is based. They stifle innovation. They hurt producers and workers and increase cost for consumers,” Garland said Thursday. Read more here. Switzerland gets a surprise rate cut. Will other central banks move before the Fed? The Swiss National Bank surprised markets Thursday by cutting interest rates, becoming the first of the world’s major central banks to do so since they began battling a post-pandemic surge in prices. The SNB announced that it would reduce the cost of borrowing by a quarter of a percentage point as it revised down its forecasts for inflation this year and next, reports my colleague Anna Cooban. “The fight against inflation over the past two and a half years has been effective,” it said in a statement. Pressure is also building for the European Central Bank to cut rates for the 20 countries that use the euro. Data released Thursday suggested the region’s economy went backward in March, bolstering the case for the ECB to break with tradition and reduce rates before the US Federal Reserve. The Purchasing Managers’ Index showed a slight increase to 49.9 in March, driven by expansion in the services sector, but remained below the 50 mark that separates contraction from growth. Europe’s manufacturers have spent the best part of the past two years grappling with steep energy costs, which surged after Russia invaded Ukraine. Manufacturing remains mired in a deep contraction, according to the latest PMI numbers. Read more here.