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Small Caps Lag as Major US Stocks Soar
23 Nov, 2025
Summary
- Major US stock indexes like S&P 500 and Nasdaq show strong gains.
- Small-cap Russell 2000 index struggles, down YTD and weekly.
- US small-cap stocks lag significantly behind international markets.
The U.S. stock market presents a tale of two halves, with major indexes like the S&P 500, Dow Jones, and Nasdaq celebrating robust gains this year, while small-cap stocks are facing considerable headwinds. The Russell 2000 index, a benchmark for smaller companies, has seen a modest year-to-date increase of 6.3 percent, a stark contrast to the 12.3 percent, 8.7 percent, and 15.3 percent gains seen in the S&P 500, Dow Jones, and Nasdaq, respectively.
Historically, periods of such severe small-cap underperformance are rare, with the current situation drawing parallels to the late 1990s. Despite a decade of growth for the Russell 2000, its total return significantly trails that of the S&P 500. Year-to-date, U.S. small-cap stocks have only managed a 6 percent rise, placing them among the world's worst-performing regions, far behind the strong returns seen in South Korea, Spain, and Brazil.
