After three years of stagnation, U.S. small-cap stocks surged in November, with the Russell 2000 index approaching historical highs
This indicates that the rebound in the U.S. stock market this year has expanded from large technology stocks to a broader range of sectors
After three years of winter, is spring coming for small-cap stocks?
On Monday, November 25, U.S. small-cap stocks performed impressively, reaching a three-year historical high for the first time during the trading session and are expected to achieve the largest monthly gain of the year. This indicates that the rebound in the U.S. stock market this year has expanded from large tech stocks to a broader range of sectors.
Yesterday, the Russell 2000 index, which measures U.S. small-cap stocks, rose 1.47% to 2442.03, with an intraday increase of 2.5%, approaching its intraday historical high of 2442.74 set in November 2021.
So far in November, the Russell 2000 index has risen over 11%, while the S&P 500 has only increased by 4.9% this month. Year-to-date, the Russell 2000 index has risen by 21%, although it lags behind the S&P 500's 25.5%, some ETFs focused on small-cap growth have nearly matched the S&P 500's gains, such as the Vanguard Small-Cap Growth ETF and the iShares Russell 2000 Growth ETF, which have increased by 24.8% and 24.7%, respectively.
Analysts believe that the resurgence of small-cap stocks nearing historical highs is due to investors' expectations that Trump's policies, particularly tax cuts, will boost U.S. economic growth.
Morningstar index strategist Dan Lefkovitz stated earlier this month that small-cap stocks are primarily concentrated in "U.S.-focused, economically sensitive" market sectors, including financial services, basic materials, consumer discretionary, and real estate, which may perform well under Trump's policies.
Jefferies analysts noted in a report that the path of interest rates will affect the sustainability of the small-cap stock rebound.