Small-cap stocks on longest winning streak since 2023, but still trailing larger counterparts

From Yahoo Finance: 2025-05-16 16:10:00

The Russell 2000 saw a significant decline earlier this year, losing a quarter of its value by mid-April. However, small-cap stocks have been on a winning streak, with the Russell 2000 closing out its sixth consecutive week of gains, the longest streak since 2023.

This positive momentum comes as markets rally on optimism about easing global trade tensions. The recent agreement between the U.S. and China to reduce tariffs on each other’s imports for 90 days has bolstered small-cap stocks, erasing previous losses.

President Trump’s economic policies have hit small-cap stocks hard, with the Russell 2000 losing nearly a quarter of its value since his inauguration. In contrast, larger companies represented by the Russell 1000 index have seen an 18% slide over the same period.

Smaller companies face challenges in adapting to tariffs compared to larger competitors, who have more leverage in negotiating prices and easier access to capital. Despite recent gains, the Russell 2000 is still down 5% year-to-date, trailing the performance of the Russell 1000, S&P 500, and Dow Jones Industrial Average.

Despite six weeks of gains, the Russell 2000 remains in negative territory for the year, falling behind the Dow and S&P 500 performances. Small-cap stocks are still struggling to catch up to their larger counterparts in the current market climate.

Read more: Small Cap Stocks Notch Longest Winning Streak Since 2023