Small-cap stocks are experiencing a remarkable resurgence this month, on track for their best December performance in history. This surge is also the most significant month-over-month outperformance against large-cap stocks since February 2000.
According to Dow Jones Market Data, the Russell 2000 (RUT), which comprises the 2,000 smallest companies by market capitalization in the Russell 3000 (RUA), has surged 13.7% thus far in December. This remarkable rally positions the index for its best December on record.
In comparison, the S&P 500 (SPX) has recorded a modest 4.9% increase this month. Consequently, the small-cap equity gauge has outperformed the large-cap benchmark by a considerable 8.8%, marking the largest margin since February 2000.
This reversal in the trend of the Russell 2000 is noteworthy. Earlier this year, the index significantly lagged behind its large-cap counterpart. Even with its impressive end-of-year rally, the Russell 2000 still lags behind larger indexes in terms of gains. So far in 2023, it has achieved a gain of 16.7%, compared to a 24.8% rise by the S&P 500 and an impressive 44.5% increase by the tech-heavy Nasdaq Composite (COMP).
As of Thursday afternoon, the Russell 2000 was down 0.5%, while the S&P 500 had risen by nearly 0.2%, according to FactSet data. The Nasdaq Composite saw a modest increase of less than 0.1%.
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