Even for investors and daily “Marketplace” listeners who keep track of major stock indices, the market has been surprising a lot of us. While the Big Tech companies of the so-called Magnificent Seven have stumbled in their earnings lately, the hundreds of comparatively smaller companies in the S&P 500 have sprung to life.

Karen Langley is a markets reporter for the Wall Street Journal. She joined Marketplace’s Kristin Schwab to talk about an unexpected stock market rotation. An edited transcript of their conversation is below.

Kristin Schwab: So let’s start with what happened before we actually got to this turning point we’re talking about. What made investors run to those Magnificent Seven stocks in the first place?

Karen Langley: So in recent months, those Big Tech stocks, companies that we’ve all heard about like Microsoft, Amazon and Nvidia, they’ve really been powering the stock market to multiple records recently. And that’s in large part because investors are so excited about the potential that these advances in artificial intelligence are going to really drive demand for the products and services that those companies offer. One other thing that has been making investors excited is just the fact that they are such big companies with really large markets, solid positions in those markets, that investors see those companies as kind of sturdy, resilient places to be that won’t be really susceptible to changing economic winds. So they’ve seen some of those Big Tech companies as safe places to be compared to other parts of the market.

Schwab: So at what point does everything kind of turn on its head, and what happened?

Langley: So, a few weeks ago, there was an inflation report that came out that showed that inflation had been cooler than expected. And while investors have been closely following inflation data for a long time, now, this report sparked a sudden shift in the markets. You could see that investors were suddenly racing to trim their possessions in those Big Tech stocks that have rallied so much, and instead wanting to buy pieces of many of the smaller publicly traded companies that really had not been performing as well recently. Investors who I spoke with said that they saw these smaller companies as ones that were likely to benefit more if the Federal Reserve does now start cutting rates, you know, feeling that its battle against inflation has been successful, and that the economy is ready for lower rates.

Schwab: How did economists and other investors react to that?

Langley: So the race in the Big Tech stocks, and the fact that they had been rallying and driving the market higher was something that investors expected would eventually turn. You know, no trade in the market lasts forever. And as there are shifts in the economy, investors want to be exposed to different kinds of industries and companies. I think that investors did not necessarily know that this would be when that rotation within the market occurred, and I think there’s still a vigorous debate about whether this will last. But a lot of other investors who I speak with say that they do think that this shift towards smaller and more economically sensitive companies seeing success in the stock market with their share prices, that this could, in fact, persist as the Fed embarks upon lowering rates — which tends to be more helpful to those smaller, maybe slightly less financially robust companies.

Schwab: I’m wondering if we put uncertainty aside a bit for a minute and just talk about whether we can characterize a shift like this as maybe good or bad? How do investors feel about the power kind of shifting from seven companies to a broader group?

Langley: It’s interesting because a stock index like the S&P 500 is calculated so that it gives more influence to the largest companies — the Apples, the Microsofts — and so, when we’ve been seeing these Big Tech stocks pulled back recently, we’ve been seeing the S&P 500 dip somewhat. So you know, people looking at their investment accounts may look and think, “OK, is this bad news?” However, many investors who I talk to have been a little bit nervous, a little bit concerned about the fact that a small handful of stocks have been the force that’s driving the stock markets rally, the concern being that, you know, any company — even a really great one — can always run into an individual problem. And so many of them are really pleased by this rotation to a broader number of stocks participating in the rally and feel like this could make for a more sustainable stock market advance going forward rather than one that might be vulnerable to one of the really big giants stumbling and then dragging down the whole market.