Small-cap stocks and the related exchange traded funds have moved in fits and starts this year. However, some market observers believe that with a recession unlikely, the asset class could be poised for a period of smoother upside.
For much of the first half of 2024, conversation saw a small number of stocks representing significant portions of the market's upside. In other words, market breadth was narrow and largely concentrated within a few mega-cap growth stocks.
Small-cap stocks and related ETFs have spent considerable time tantalizing and tormenting investors. So it's understandable market participants may be leery of the asset class.
Small-caps and the related ETFs continue vexing market participants. However, credible reasons remain as to why investors shouldn't be dismissive of this corner of the market.
Waiting on small-cap stocks and related ETFs to rally in earnest has, for many market participants, become an exercise in futility. Some encouraging news for smaller equities may have arrived last week in the form of the May reading of the Consumer Price Index (CPI).
If there's one corner of the equity market that's trying investors' patience, it's small-caps. For more than a year now, analysts and other experts have opined that smaller stocks are due to rally.
After a lengthy run of tantalizing and disappointing investors, small-cap stocks appear to be finally finding solid footing. For the month ending May 16, the Russell 2000 Index is higher by 7.74%, perhaps signaling smaller stocks are ready to deliver more sizable gains.