It was another week of gains for the U.S. stock market indexes. Well, except for the Russell 2000. âšī¸
Below, we can see the tech-heavy Nasdaq 100 leading this week’s charge, with the small-cap Russell 2000 sitting in the red since Monday’s open. đ
We’ve recently discussed the massive underperformance of this group of stocks, also offering a perspective on why some investors are looking for bargains in the space. Yet despite that, the spread in performance continues to grow as shorter-term concerns about interest rates and the economy cause investors to focus on the “relative safety” they perceive large-cap stocks as offering. đĄī¸
We can see that in the chart of the Nasdaq 100 vs. Russell 2000 ratio ($QQQ/$IWM), which hit new all-time highs today. As we can see, the COVID-19 pandemic accelerated a trend that’s been intact since the financial crisis ended. And while many argue that this trend has gone parabolic and may be unsustainable, it’s unclear to investors what will be the catalyst for this trend to change.
So, for now, they continue to buy what’s working and avoid what’s not. đ¤ˇ
