The Russell 2000 index reached an all-time high on Monday, buoyed by expectations of tax cuts under a second Donald Trump administration and optimism over further Federal Reserve rate cuts.
The index represents the performance of about 2,000 small-cap companies in the US. It’s a subset of the Russell 3000 Index, which includes the 3,000 largest US companies by market cap.
In intraday trading, the index reached 2,466.39 points, surpassing a previous record of 2,437.08 set in November 2021. At market close, the index was at 2422.03 points, up 1.47%.Over the past year, the index gained 35.58%.
Small-cap stocks have gained significant attention since the Federal Reserve began easing monetary policy in September, as lower borrowing costs are expected to benefit smaller companies disproportionately. Since the 5 November US presidential election, the Russell 2000 has surged over 8%, reflecting investor confidence in policy changes favoring deregulation and reduced tax burdens.
In comparison, the S&P500 is up 31.58% over the past year, or 3.5% since 5 November.
Analysts note that small-cap companies, often more domestically focused, stand to gain from Trump’s proposed economic policies, including import tariffs and less stringent regulations.