US equities have bounced back (^DJI, ^IXIC, ^GSPC) from their losing streak over the past several trading sessions. As the first quarter of 2024 comes to a close at the end of this trading week, markets could be on the path for a breakout quarter.

PGIM Quantitative Solutions CIO George Patterson joins Yahoo Finance's Market Domination the environment the Federal Reserve's interest rates have created for stocks, including small caps and meme trades.

"It's going to be a positive environment for risk assets," Patterson explains. "That said, we do see opportunities outside of the Magnificent Seven — or maybe the Magnificent Six these days — small cap, micro cap, our segments of the markets that have really been ignored or have not participated and there's still a lot of very attractive opportunities there that I think make sense for an investor with a medium-term horizon."

For more expert insight and the latest market action, click here to watch this full episode of Market Domination.

Editor's note: This article was written by Luke Carberry Mogan.

Video Transcript

JOSH LIPTON: With stocks rebounding after a few down days, it's kind of an unusual occurrence for the markets here. Again, the bullish start to 2024. So with volatility outside of mega-cap stocks remaining high, what's the best way to position your portfolio right now? Our first guest today is looking at areas beyond the Magnificent Seven to focus on.

Let's welcome in George Patterson, the CIO for PGIM Quantitative Solutions. George, it is good to see you. So, listen, the S&P 500, George, is on track here for its best first quarter since 2019. What do you think, George? We just kind of keep grinding higher here in the near to intermediate term?

GEORGE PATTERSON: Well, the overall economy seems to be holding up very well. The Fed has been raising rates or held rates high as we've heard. Inflation is moving in their direction. And for many years, for the last year, everyone was talking about a recession or a hard landing. A lot of that talk is really disappeared.

So I think it's going to be a positive environment for risk assets. That said, we do see opportunities outside of the Magnificent Seven, or maybe the Magnificent Six these days. Small cap, micro-cap, our segments of the markets that really have been ignored or have not participated. And there's still a lot of very attractive opportunities there that I think make sense for an investor with a medium term horizon.

JARED BLIKRE: Well, George, let's talk about some of those opportunities. And you can mention some specific names or areas among the small caps and micro-caps that you might mention. Of course, the Russell 2000 pretty far from a record high unlike the other indices. But it's been trying to break out recently. I'm just wondering if we get some momentum in the small caps and micro-caps, where are you going to look for that action to reside?