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Blue Chips Keep Winning, but Here's Where the Real Growth Is

Blue Chips Keep Winning, but Here's Where the Real Growth Is

Stocks took a cautious step forward Tuesday following the long holiday weekend, taking their lead from the resumption of trade talks between the U.S. and China. President Donald Trump added a little optimism during the day, saying negotiations are going "very well" and that a previously set March 1 deadline for a deal isn't a "magical date." It was Walmart (WMT) that helped the Dow get over the hump, with the retailer reporting a fantastic fourth quarter that included explosive growth in its e-commerce operations. In fact, several analysts are now even more optimistic about Walmart's ability to fend off Amazon.com (AMZN). The 2.2% gain in WMT shares helped the industrial average finish 8 points higher to 25,891.

The Dow extended its gains to 11% for the year -- a banner start for blue chips. But smaller stocks are doing even better. The Russell 2000 Index of small-cap companies has rocketed ahead by 16.8% as investors' tastes for risk have improved following 2018's fourth-quarter drubbing. Most of the top prospects in the small-cap space are of the high-growth persuasion, but if you know where to look, you can also find some high-quality sources of high yield, too. Also flexing their muscles this year with a 15.3% gain are mid-caps -- the so-called investing "sweet spot" that blends qualities from small caps (high upside potential) and large caps (more stable, better access to capital) to provide an ideal risk/return blend.

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