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Small Caps Soar: Russell 2000 Hits Record High
13 Jan
Summary
- Smallcap stocks achieved their longest winning streak in seven years.
- The Russell 2000 index closed at a record high, outperforming peers.
- Interest rate expectations and economic data fuel small cap's rise.
US markets demonstrated resilience on Monday, with major indices closing in the green despite early futures declines. Smallcap stocks, in particular, have achieved their longest winning streak against larger peers in seven years, highlighted by the Russell 2000 index reaching a record high.
This significant outperformance is attributed to a combination of factors. Anticipation of lower interest rates, which typically benefits smaller companies more than large ones, coupled with resilient economic indicators, has fueled the upward momentum in the smallcap sector. This trend echoes a similar market dynamic seen in January 2019.
Historical context from January 2019 reveals that a similar Russell 2000 rally followed a period of significant market declines. On Monday, the Dow Jones recovered substantially from intraday lows, and the S&P 500 neared the 7,000 mark. Alphabet's crossing of $4 trillion in market capitalization also contributed to Nasdaq's strong performance.
