Small caps are keeping pace with the s&p 500. Don't expect it to last, wells fargo investment institute says.
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Small-cap stocks have had an impressive run off the April 8 lows, with the Russell 2000 keeping pace with the large-cap S&P 500. Both were up by around 16% through Friday's close
from the lows set after last month's tariff-induced selloff. Edward Lee, investment strategist at Wells Fargo Investment Institute, argued in a Monday note that large caps were likely
to resume outpacing small caps, however. The Russell 2000 was down 8.5% in the year to date through Friday, versus a 1.3% fall for the S&P 500. Small caps have benefited from the easing
of tariff fears, stronger-than-expected economic data and an "all-around solid" earnings season, Lee said. Expectations for deregulation, lower short-term interest rates and a
cyclical economic recovery in late 2025 and into 2026 are all positives for the market segment.