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Big Tech surged to hit all-time highs, with the top 10 stocks accounting for 35.7% of the S&P 500âs market cap â the highest since at least 1972. The reason is simple â investors flocked to these stocks due to their earnings power. They are basically swimming in cash. They are reinvesting it in AI products while also returning cash to shareholders through dividends and buybacks. How can investors not like the combination? Whatâs more, Solita Marcelli at UBS Global Wealth Management believes that small-cap stocks are due for a rally because lower interest rates can help their businesses grow. Wall Street, of course, is expecting rate cuts soon because of slowing economic data. - âThe AI revolution is set to drive further growth,â said Solita Marcelli at UBS Global Wealth Management. - âUS stocks are likely to remain supported. In addition to a strategic allocation to the tech sector, we see a particular opportunity in small-cap stocks supported by the beginning of the Fedâs easing cycle.â Solita Marcelli at UBS Global Wealth Management (Photo: CNBC) Namely, a private payrolls reading showed hiring grew at the slowest pace since the start of the year. At the same time, the services sector expanded the most in nine months. Could it mean a soft landing? Who knows. It is going to depend on inflation data. As long as inflation keeps cooling, it will give the Federal Reserve more confidence to cut interest rates as soon as September. Nvidiaâs surge: Thereâs no stopping Nvidia. The AI chipmaker just hit $3 trillion in market cap after a 147% rally this year. Yesterday, it surged 5.2% to hit a new record high. The company is now more valuable than Apple and trailed just behind Microsoft. It shows that the AI frenzy is still alive and well. Fedâs meeting: Next week, the central bank will meet for its latest interest rate decision. Officials are largely expected to leave rates unchanged, but they will release their latest rate outlook. They projected three rate cuts in 2024 back in March, so investors will see if that outlook has changed or not. Stephen Brown at Capital Economics expect the outlook to reduce to one or two cuts this year. - âThe âdotsâ are likely to cluster around one or two interest rate cuts this year,â said Stephen Brown at Capital Economics. âNevertheless, as inflation falls a bit faster than officials expect and GDP growth disappoints, our base case remains that the Fed will cut in September.â And of course, Wall Street will digest Fed Chair Jerome Powell for any change in his tone. Donât Sleep on This Mining Stock Todayâs Pick: Rio Tinto Group ([RIO]( What does Rio Tinto do? They mine for the marketâs hottest metals across every populated continent. Their operations include mainstays like iron, aluminum, zinc, salt, and copper as well as rare earths like titanium, lithium, diamonds, and silver. There is one major force that stand to benefit Rio Tinto: âGoing greenâ requires specific metals to manufacture the solar panels, wind turbines, electric vehicles, and power storage systems. Iron, aluminum, and copper are used in the manufacturing of solar panels and power transmission infrastructure. Iron, copper, and titanium are needed to build light but sturdy wind towers. And electric cars not only use iron, aluminum, copper, and lithium â they also require four times more copper for wiring and 20% more sensors than gas-powered vehicles. (Source: Rio Tinto) Metals prices are soaring. Since 2020, aluminum has increased nearly doubled, copper has more than doubled, and iron has increased by about 50%. And itâs not just âtransitoryâ â China has been building jaw-dropping infrastructure for multiple decades. In the last 10 years, theyâve built over 160 new airports and over 15,000 miles of high speed rail. You can see how much China has invested in these products: (Source: Rio Tinto) Rio has also taken advantage of their growing cash flow to tidy up their balance sheet. Theyâve used their considerable amount of operating cash flow to pay down debt. - Their debt/capital is modest at 25% with a current ratio of 1.69 with over $10 billion in cash. This is unusual. Capital intensive mining operations often come with high debt loads that eat into profitability. Rioâs low debt and efficient capital deployment means a stunning 18% profit margin last year. As an added bonus, Rio has completely divested from any coal operations. Theyâre committed to an environmentally sustainable future. This includes investments in carbon neutral steel and aluminum smelting by 2050. Bottom Line: Rio Tinto Group boasts unbelievable numbers. They pay an 6.39% dividend yield. If you stopped there, it would be an amazing income stock. But they also produce essential fundamental materials required for infrastructure and clean energy. Both industries should drive ongoing demand that should merit a much higher P/E than the 11 ttm RIO is priced at today. â [EARN WHILE YOU LEARN! JOIN OUR FREE LIVE TRADING SESSION!]( â â © All Rights Reserved, Trade Alliance [Unsubscribe]( | [Manage Preferences](