One of investors' biggest concerns about Tesla is fading.

The sustainability of the rebound since 2022 has been a nagging concern for investors, but that worry is now easing.

The S&P 500 has hit more than 30 new highs so far this year, and the rally is finally starting to spread to broader stocks. In other words, the tech-heavy rally that has driven the S&P 500 and Nasdaq 100 higher is no longer limited to just a handful of large tech stocks.

That is a big win for the bulls, who have been concerned about the lack of participation by small companies and the historic concentration of the “Big Seven” in the rebound that started in October 2022.

The market’s rebound last week, after the U.S. consumer price index came in below expectations, is signaling that the Federal Reserve is about to cut interest rates, and small stocks are rebounding to historic levels.

According to Bespoke Investment Group, the Russell 2000 index has risen more than 1% for five consecutive trading days, which has only happened four times in the index’s history since 1979.

The large gains in small stocks are striking, while large stocks have largely missed out on those gains in the past week.

UBS said that if four conditions are met, the rotation of small stocks could continue, which is healthy for the broader market.

UBS said in a Tuesday note that as long as inflation remains stable, the Fed starts cutting interest rates, the economy continues to grow, and earnings growth extends to small companies, the breadth of the rebound should continue to expand. However, for small stocks to trade well, many things need to go right, which keeps UBS cautious on the recent gains.

Shannon Saccocia, chief investment officer at Neuberger Berman’s private wealth, expects a significant improvement in earnings for small stocks in the future.

Carson Group’s chief market strategist, Ryan Detrick, also sees a sustainable rally for small stocks. He expects small-, mid-, industrial- and financial-stock sectors to take over the baton from large tech stocks in the second half of this year, which is normal for an up cycle.

This change will ultimately eliminate some investors’ bearish concerns about the narrowness of the rebound.

Detrick said, “In a healthy bull market, you want to see broader participation. Never forget, the life of a bull market is rotation, and we expect that to happen this year.”