LIVE MARKETS-Small caps face uphill battle after recent strong run

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Dow Jones Industrial Average DJI	47706.51	-0.07%
CBOE Volatility Index	25.28	+1.40%
Spicology Inc SPCY	18.37 18.37	0.00% 0.00% Pre
S&P 500 index SPX	6781.48	-0.21%
NASDAQ IXIC	22697.10	+0.01%

S&P 500 edges green, Dow ~flat, Nasdaq dips in volatile trading

Energy leads S&P 500 sector gainers; Comm Svcs weakest group

Euro STOXX 600 index up ~0.1%

Dollar down; bitcoin falls >3%; gold, crude both gain >1%

US 10-Year Treasury yield flat at ~4.15%

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SMALL CAPS FACE UPHILL BATTLE AFTER RECENT STRONG RUN

The recent small-cap outperformance will be hard to maintain, which may now make large-cap stocks a more attractive investment option, according to DataTrek Research.

The Russell 2000 .RUT outperformed the S&P 500 .SPX by more than two standard deviations over the past 50 days, which has only occurred 4 other times since 2015, Nicholas Colas, co-founder at the firm said in a report.

These were in January 2017, May 2020, November 2020, and December 2023.

And with the exception of the 2020-2021 speculative stock bubble, the Russell then underperformed over the next 50 days, Colas said. That leaves him with two takeaways.

Barring explosive speculative fervor in U.S. small caps, history suggests rotating to large caps. Small caps' odds of outperforming are poor and they're already rolling over.
The best case for U.S. small caps is they aren't burning shareholder capital on AI infrastructure, making them a potential safe harbor if investors sour further on the AI trade.

(Karen Brettell)

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EARLIER ON LIVE MARKETS:

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US STOCKS GIVE UP INITIAL GAINS, TURN RED, AS RATE CUT BETS TAKE A HIT CLICK HERE

US STOCK FUTURES RALLY, YIELDS JUMP, AFTER HOT JOBS DATA CLICK HERE

IS IT TOO LATE TO ENTER KOREA AI MEMORY TRADE? CLICK HERE

STOXX 600 DRAGGED LOWER AS WEALTH ADVISORS SINK, EARNINGS MIXED BAG CLICK HERE

BEFORE THE BELL: EUROPEAN FUTURES MIXED, LSEG EYED, LOTS OF EARNINGS CLICK HERE

YEN ROARS BACK AS US CONSUMER ENGINE SPUTTERS CLICK HERE

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