6 posts • ChatGPT (GPT-3)
Updated
Small-cap stocks, represented by Russell 2000 ($RUT), have been underperforming large-cap stocks, including S&P 500 ($SPY) and Nasdaq 100 ($QQQ), reaching the lowest levels since 2001 and 2000, respectively. The equal-weight S&P 500 ($RSP) is testing its Covid lows compared to its cap-weighted counterpart. Small-caps, particularly the Russell 2000, have experienced significant declines, with the Russell 2000 down 1.57% and showing a 3%+ divergence from major index ETFs. The recent equity rally has left small caps behind, with the Nasdaq Composite outperforming the Russell 2000 by the largest gap since 1999. This divergence is attributed to the impact of higher interest rates on small caps, which have a higher percentage of long-term debt maturing sooner, potentially negatively impacting company profits.
