U.S. small-cap stocks looked ready to take off this year after a mostly lackluster 2023 — but volatility greeted investors over the past week, as uncertainty on when the Federal Reserve will cut interest rates crept back on Wall Street after a mixed batch of January inflation data. The small-cap benchmark Russell 2000 index
RUT
— which measures the performance of 2,000 small and midsized companies included in the Russell 3000
RUA
index — on Friday booked its seventh straight session with a move of at least 1% in either direction, its longest such run since a 10-session streak that ended in March 2023, according to Dow Jones Market Data.
For the week, the Russell 2000 advanced 1.1%, outperforming the tech-heavy Nasdaq Composite
COMP,
which fell 1.3%, by the widest margin since the week ending Dec. 15 of last year. Additionally, the S&P 500
SPX
fell 0.4% for the week while the Dow Jones Industrial Average
DJIA
was off 0.1%, with all three major large-cap indexes snapping five-week winning streaks, according to Dow Jones Market Data. “Small caps are almost directly a ‘Fed story’ or a ‘rates story,’” said Anna Rathbun, chief investment officer at CBIZ Investment Advisory Services. “You see more volatility in small caps because of their dependency on rates,” she told MarketWatch in a phone interview on Thursday. Investors usually see small-cap stocks getting punished when there is market sentiment that interest rates will stay higher for longer, and recovering on signals that the central bank’s monetary-tightening cycle might be over, Rathbun said. On Tuesday, a steep selloff across U.S. stock and government-debt markets after a hotter-than-expected January inflation report dragged the Russell 2000 down nearly 4% — its worst day since June 2022 — as investors confronted the bitter possibility that interest rates will stay higher for months longer than they had hoped. However, investors breathed a sigh of relief over the following trading days, after dovish comments from Chicago Fed Pre …
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RUT
— which measures the performance of 2,000 small and midsized companies included in the Russell 3000
RUA
index — on Friday booked its seventh straight session with a move of at least 1% in either direction, its longest such run since a 10-session streak that ended in March 2023, according to Dow Jones Market Data.
For the week, the Russell 2000 advanced 1.1%, outperforming the tech-heavy Nasdaq Composite
COMP,
which fell 1.3%, by the widest margin since the week ending Dec. 15 of last year. Additionally, the S&P 500
SPX
fell 0.4% for the week while the Dow Jones Industrial Average
DJIA
was off 0.1%, with all three major large-cap indexes snapping five-week winning streaks, according to Dow Jones Market Data. “Small caps are almost directly a ‘Fed story’ or a ‘rates story,’” said Anna Rathbun, chief investment officer at CBIZ Investment Advisory Services. “You see more volatility in small caps because of their dependency on rates,” she told MarketWatch in a phone interview on Thursday. Investors usually see small-cap stocks getting punished when there is market sentiment that interest rates will stay higher for longer, and recovering on signals that the central bank’s monetary-tightening cycle might be over, Rathbun said. On Tuesday, a steep selloff across U.S. stock and government-debt markets after a hotter-than-expected January inflation report dragged the Russell 2000 down nearly 4% — its worst day since June 2022 — as investors confronted the bitter possibility that interest rates will stay higher for months longer than they had hoped. However, investors breathed a sigh of relief over the following trading days, after dovish comments from Chicago Fed Pre …nnDiscussion:nn” ai_name=”RocketNews AI: ” start_sentence=”Can I tell you more about this article?” text_input_placeholder=”Type ‘Yes'”]