Lasting Recovery in Small Caps Still Elusive as Debt Costs Bite
- Higher-for-longer rates view dents optimism on small-cap rally
- US small caps fail to sustain three bull markets in 18 months
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The powerful rally in small-cap stocks looks like yet another false start rather than a lasting recovery.
The Russell 2000 Index — the world’s most closely followed gauge of smaller companies — rose over 5% last week as softer US inflation data bolstered bets that interest rates have topped out. Still, it will be hard for the gauge to avoid notching its worst year since 1998 against a benchmark of larger peers, given how vulnerable it is to damagingly high debt costs and a potential economic downturn.