Is the bear market in small-cap stocks in the US continuing? The Russell 2000 Index falls below its 200-day moving average.
According to Dow Jones market data, the Russell 2000 Index closed below the important technical level of its 200-day moving average for the first time since June 5th.
In the face of expectations of "longer-term" high interest rates, small-cap stocks continue to underperform, with the small-cap benchmark Russell 2000 Index closing below a key support level on Wednesday.
The Russell 2000 Index closed at 1,840.84 points on Wednesday. According to Dow Jones market data, this is the first time the index has closed below the technically important 200-day moving average since June 5.
As of Tuesday, the index has been above the 200-day moving average for 68 trading days, the longest streak since September 25, 2020, to August 18, 2021, spanning 226 consecutive trading days.
Traders and technical analysts often view the 200-day moving average as a signal of the market's long-term trend.
Significantly weaker than the S&P 500 Index
The Russell 2000 Index has significantly lagged behind the broader S&P 500 Index in September and year-to-date performance.
The small-cap index has fallen 3.1% month-to-date and risen 4.5% year-to-date. In contrast, the S&P 500 Index has declined 0.9% in September but has gained 16.4% in 2023.
The Russell 2000 Index is down 8.1% from its 2023 high set on July 31.
Sameer Samana, Senior Global Market Strategist at Wells Fargo, said, "While we expect small-cap stocks to eventually have their day in the sun (likely during the next economic upturn), we believe it is still too early to increase exposure to these companies," adding, "Historically, these declines have often been seasonal."