Russell 2000 on pace for best month versus S&P 500 in nearly 3 years

The Russell 2000 has outperformed the S&P 500 by 4.6% in December thus far, putting it on pace for its best month versus the largest-cap U.S. equity gauge since January 2021.

The small-cap equity gauge
has risen 7.7% so far this month, while the S&P 500
has gained 3.1%, according to FactSet data.

The last time the Russell 2000 performed this well against the S&P 500 was in January 2021, when the small-cap index rose 5% while the large-cap gauge fell 1.1%, according to Dow Jones Market Data.

The Russell 2000, which is made up of the 2,000 smallest companies by market capitalization in the Russell 3000
climbed 66.24 points on Wednesday, or 3.5%, to close at 1,947.51, its highest level since August 7. Markets rallied in afternoon trading after the Federal Reserve kept its key policy rate unchanged at the range of 5.25% to 5.5% but signaled that a pivot to rate cuts is likely in 2024. 

Small cap stocks’ recent outperformance is a reversal of the trend seen so far this year. The Russell 2000 has lagged behind its large-cap peers year-to-date, posting a 10.6% increase compared to a 22.6% gain by the S&P 500 and a 40.8% gain for the tech-heavy Nasdaq Composite

Read: ‘Magnificent Seven’ up for another bull run? What to expect from technology stocks in 2024.

The Dow Jones Industrial Average
on Wednesday climbed 1.4%, eclipsing 37,000 points for the first time and closing at a record high. The S&P 500 and the Nasdaq Composite each also advanced nearly 1.4%.

Abhirami Shrinivas contributed. 

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