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In the financial landscape, December has witnessed a remarkable surge in the Russell 2000 small-cap stock index, surpassing its large-cap counterpart, the S&P 500, by a substantial margin.
With a robust 7.7% rally, the Russell 2000 has outpaced the S&P 500 by 4.6%, marking its most significant relative outperformance since January 2021.
(SPX vs RUT One-month Chart)
The Russell 2000 index, a measure of small-cap US stocks in the Russell 3000, has historically demonstrated strength during times of economic turbulence. Its focus on the universe of U.S. small capitalization stocks positions it uniquely in the market.
Analyzing the performance of the S&P 500 versus the Russell 2000 ETF reveals interesting dynamics. While the S&P 500 typically includes larger, well-established companies, the Russell 2000 Index follows the performance of around 2,000 U.S. small-cap stocks. This diversity can be a key factor in its recent outperformance.
The differences between the Russell 2000 and S&P 500 are noteworthy. The Russell 2000 serves as a useful tool for tracking and profiting from the universe of U.S. small capitalization stocks, whereas the S&P 500 leans towards more tech and growth-focused companies.
According to analysts, the small-caps index is expected to rise by 14% in the next 12 months, outpacing the projected 9% climb for the S&P 500. This forecast aligns with the recent trend of the Russell 2000 outperforming the largest-cap U.S. index.
(SPX vs RUT One-year Chart)
The Russell 2000’s recent outperformance during times of economic turbulence, as discussed in Investopedia, suggests that small-caps may present an attractive option for investors seeking resilience in varying market conditions.
A: The primary distinction lies in the size and focus of the companies each index comprises. The S&P 500 includes larger, well-established companies, while the Russell 2000 focuses on around 2,000 U.S. small-cap stocks.
A: Historically, the Russell 2000 has shown resilience during economic turbulence, often outperforming larger indices like the S&P 500.
A: Analysts anticipate a 14% rise in the small-caps index compared to a projected 9% climb for the S&P 500 in the next 12 months.
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