Market-Beating Microcaps Get Rude Awakening From Trade Tensions

Investors in the tiniest, most speculative US stocks were riding a market-beating rally for months. Then they got a harsh reminder of just how tenuous market confidence can be.

The Russell Microcap Index, a gauge of US firms with an average market value of $450 million, slumped 3.1% on Friday, its steepest loss since April’s market chaos, after President Donald Trump’s threat to ramp up tariffs on China spoiled the risk-on mood that had driven the group to the brink of its first record since 2021. Stocks slid broadly on the specter of renewed trade tensions, with the benchmark S&P 500 Index sinking 2.7%.