On July 27, Citi's strategy team warned that as expectations for Federal Reserve interest rate hikes increase, small-cap stocks may become a "disaster zone" during market adjustments. With the new Fed Chair Kevin Warsh adopting a hawkish policy style, the market is shifting from relying on forward guidance to focusing on economic data. Currently, the market's expectations for a rate hike this week have risen to over 30%. Stuart Kaiser, head of U.S. equity trading strategy at Citi, stated that even if rates remain unchanged this week, the probability of a hike in September is still as high as 70%. Citi recommends that investors hedge risks by buying put options on the Russell 2000 Index ETF (IWM). Citi believes that small-cap stocks are more sensitive to interest rates, economic growth, and credit conditions, and under hawkish signals from the Fed, the Russell 2000 Index may face greater pressure than larger tech stocks. Meanwhile, Goldman Sachs data shows that hedge funds are increasing their positions in the healthcare sector, with related funds performing strongly recently. From August 2025 to April 2026, healthcare-focused hedge funds have an average return of nearly 40%, significantly higher than general equity funds. Factors such as AI-driven new drug development, increased mergers and acquisitions in the healthcare industry, and improved FDA approval efficiency are considered important reasons for the influx of capital. This week, market focus remains on the Fed's interest rate meeting and earnings reports from large tech companies. Citi points out that the current market has very high performance expectations; even if corporate earnings exceed expectations, individual stocks may still decline due to "profit-taking."