Small- and mid-cap stocks (SMID) have underperformed large-caps over the past 12 months, but may be in a better position to generate market-beating returns going forward. SMID companies tend to focus on domestic markets, so their businesses could be less disrupted by the fallout from global events. As well, the prices of SMID stocks generally are lower than the prices of large-caps. As well, there are long stretches in the record books when SMID stocks have outperformed large-caps. That said, SMID stocks can be risky. The standard deviation for monthly returns was 5.7% for SMID stocks over a 2003-2021 test period, versus 4.3% for large-caps. Still, despite the risks, diversified investors look to have exposure to small- and mid-caps based on the long-term performance record.

Ethan Allen Interiors Inc., based in Danbury, Connecticut, is a manufacturer and retailer of home furnishings. FY23 sales were $791 million. The company sells its products through a network of approximately 300 retail design centers. Products include beds, tables and other case goods, upholstered items such as sofas and recliners, and accessories such as clocks, window coverings and rugs. The company manufactures about 75% of its products in North America.

Stocks are higher at midday, this after weakness earlier in the session that was mostly the result of disappointing guidance from the likes of Intel and KLA Corp. That said, December's headline Personal Consumption Expenditures price index appears to have resonated with investors who seem to be increasingly of the opinion that the Fed has indeed set the stage for a soft landing of the U.S. economy. PCE rose 0.2%, following a 0.1% decline in November and leaving annual PCE unchanged at 2.6%. Core PCE also rose 0.2%, up from 0.1% in November and bringing the annual rate to 2.9% from 3.0% last month. Elsewhere, Personal Spending rose 0.7%, which was higher than the expected increase of 0.5%. Personal Income drifted lower, rising 0.3% to match expectations but down from 0.4% in November. As well, solid earnings from American Express and Colgate-Palmolive are adding to a positive mood as the trading week draws to a close.

Ethan Allen Interiors Inc., based in Danbury, Connecticut, is a manufacturer and retailer of home furnishings. FY23 sales were $791 million. The company sells its products through a network of approximately 300 retail design centers. Products include beds, tables and other case goods, upholstered items such as sofas and recliners, and accessories such as clocks, window coverings and rugs. The company manufactures about 75% of its products in North America.