Quarterly Outlook
Macro Outlook: The US rate cut cycle has begun
Peter Garnry
Chief Investment Strategist
Head of Fixed Income Strategy
The Russell Index, or more accurately the Russell Indexes, refer to a family of U.S. stock market indices published by FTSE Russell, a subsidiary of the London Stock Exchange Group. The most notable indices within the Russell family include:
The Russell 2000, in particular, is widely used as a gauge for the performance of small-cap stocks, while the Russell 1000 serves as a benchmark for large-cap stocks.
In the past ten days the Russell 2000 soared by more than 10%, while the S&P 500 and Nasdaq 100 have been falling suggesting that there is some sort of rotation in stock markets. Such rotation can indicate several market trends and investor sentiments:
The factors outlined above, along with a possibility of a reacceleration of the economy (as explained in a previous analysis), could indeed contribute to further potential for the Russell 2000 and smaller companies in general. Small-cap stocks typically benefit more from economic growth due to their domestic focus and higher sensitivity to changes in economic conditions. An improving economic outlook can lead to increased consumer spending and business investment, which would positively impact the financial performance of small-cap companies.