Are Reports of Small-Cap Stocks’ Revival Prospects Premature?

, a widely followed benchmark of small-cap shares, has revived hope anew that this slice of the equity market is finally set to recover after a long stretch of underperformance. But we’ve been here before, multiple times in recent years. Is this time different? Maybe, but the evidence is still a bit thin.

Despite the new round of optimism, the burden of proof is still firmly on small caps to display relative strength. Year to date comparisons, however, still look ugly. The iShares Core S&P Small-Cap ETF have closed the gap rather dramatically and are now neck and neck with SPY, each posting near-4% rallies.

Given the recent strength, the case for a contrarian bet on small caps looks more compelling these days. Comparing IJR against a wide set of factor ETFs for year-to-date results reminds that small caps have underperformed most slices of the equity market. Assuming a reversion-to-the mean effect suggests that a degree of normalization may be brewing in favor of small firms.

The implication: expectations that the Federal Reserve will continue to lower interest rates at a time when the US economy still looks poised to expand may fuel an extended small-cap rally. Hope, it seems, is reviving once more for these stocks. For portfolios that are underweight small caps, or with a zero weighting, one can argue that the timing is ripe for making a calculated risk that the optimists are right this time.

España Últimas Noticias, España Titulares

Similar News:También puedes leer noticias similares a ésta que hemos recopilado de otras fuentes de noticias.

Big-cap bull market turns two, leaving small-cap stocks further behindIn exasperation, small cap enthusiasts have turned to ETFs that exclude unprofitable companies altogether, and those funds have been attracting inflows.
Fuente: CNBC - 🏆 12. / 72 Leer más »

Small-Cap Stocks Poised For Massive Gains, Says Richard BernsteinRichard Bernstein of Richard Bernstein Advisors predicts significant growth in small-cap stocks over the coming months due to projected earnings growth exceeding that of larger companies. He attributes this trend, unusual for a period when the Federal Reserve is easing monetary policy, to accelerating profits and a favorable economic environment.
Fuente: CNBC - 🏆 12. / 72 Leer más »

Why Small-Cap Stocks Could Be Ready to Outperform After Rate CutsStocks Analysis by MarketBeat.com (Ryan Hasson) covering: US Small Cap 2000, iShares Russell 2000 ETF, Direxion Daily Small Cap Bull 3X Shares. Read MarketBeat.com (Ryan Hasson)'s latest article on Investing.com
Fuente: Investingcom - 🏆 450. / 53 Leer más »

Small-cap stocks are showing signs of lifeThe iShares Russell 2000 ETF outpaced the S&P 500 the last week, suggesting small stocks could finally start to break out.
Fuente: CNBC - 🏆 12. / 72 Leer más »

2 Cheap Small-Cap Stocks to Buy After the Fed's Bold 50bps Rate CutStocks Analysis by Investing.com (Jesse Cohen) covering: Purecycle Technologies Holdings Corp, Nuscale Power Corp. Read Investing.com (Jesse Cohen)'s latest article on Investing.com
Fuente: Investingcom - 🏆 450. / 53 Leer más »

3 Small-Cap Stocks to Buy Before They SurgeStocks Analysis by The Tokenist (Timothy Fries) covering: US Small Cap 2000, Goodyear Tire & Rubber Co, Compagnie Generale des Etablissements Michelin SCA, Alphabet Inc Class A. Read The Tokenist (Timothy Fries)'s latest article on Investing.com
Fuente: Investingcom - 🏆 450. / 53 Leer más »