Russell 2000 Breaks Records Amid Small-Cap Optimism

The Russell 2000 index achieved a record-high close for the first time in four years, marking optimism about U.S. small-cap companies. Driven by lower interest rates and recent policy moves, the index surged 2.5%, ending at 2,467.70. Analysts suggest the trend may continue with further anticipated rate cuts.

The Russell 2000 index reached a milestone on Thursday, closing at record highs for the first time in four years, showcasing renewed optimism around small-cap U.S. companies. Investor confidence climbed as lower interest rates provided a significant boost.

Closing at 2,467.70, the index rose 2.5% on the day, surpassing its previous record close from November 2021. The index, composed of approximately 2,000 smaller publicly listed companies than those in the S&P 500, has surged about 40% since April 8, overcoming concerns from President Donald Trump's tariff policies.

Amid anticipation of the Federal Reserve's interest rate cut, the Russell 2000's recent performance is also bolstered by expectations of future rate reductions. Small-cap entities, relying on debt financing, benefit from lower rates, further aided by recent tax legislations. Nevertheless, the Russell has lagged behind the S&P 500's 13% gain, despite its own 11% rise this year.

(With inputs from agencies.)