Riot Platforms, Beyond Inc, Globalstar Among Small-Caps On Retail’s Radar As Russell 200 Index Rallies To 3-Year High Following Trump’s Victory

Donald Trump has had a decisive victory in the 2024 presidential election held on Tuesday and is set to retake office with a Republican majority in the Senate and likely the House of Representatives. The stock market rallied to a fresh record, and the U.S. dollar strengthened. Meanwhile, the bond market slumped, and safe haven gold retreated further away from its record high.

The stock market rally was broad-based, with all 11 S&P 500 sector classes trading firmly in the green. 

Small-Caps Shine

Small-cap stocks have seen particular strength despite the rising bond yields. The benchmark 10-year Treasury note’s yield surged above the 4.4% level for the first time since mid-June, and rising yields are a pointer toward higher interest rates. A higher interest-rate environment is typically negative for small-caps, which invariably have a higher proportion of debt capital. The cost of servicing their debt increases when interest rates rise.

Fund manager Louis Navellier said in a note to clients that higher yields will hurt mortgage rates and potentially economic growth.

Traders have overlooked this dynamic and are potentially focusing on what a Trump administration would mean for small-caps.

The iShares Russell 2,000 ETF ($IWM), an exchange-traded fund that tracks the performance of the small-cap-focused Russell 2,000 Index, was up 5.71% at $237.03 at 3 p.m. EDT.

The ETF was partly feeding off of the strength in financial services stocks, particularly regional banks. 

Trump is widely seen as good for the economy, and small-caps, which are relatively more sensitive to the vagaries of the economic environment, are playing catchup with their larger counterparts amid this hope. The perception that Trump’s policies will be business-friendly for domestic-based small-cap companies is adding to the optimism.

Traders also factor in another rate cut from the Federal Reserve as early as Thursday.

The Federal Open Market Committee - the policy-setting arm of the central bank, has kickstarted a two-day meeting on Wednesday. The futures market currently discounts a 99.2% probability of a 25-basis-point cut to 4.50%-4.75%, according to the CME FedWatch Tool.

Here’s a compilation of small-cap stocks that the retail crowd is widely following (screened using the watcher count on the Stocktwits platform and applying a set of criteria):

Riot Platforms, Inc. ($RIOT): 123,690 watchers

Beyond, Inc. ($BYON): 79,166 watchers

Cassava Sciences, Inc. ($SAVA): 52,556 watchers

Blink Charging Co. ($BLNK): 49,679 watchers

Globalstar, Inc. ($GSAT): 49,310 watchers

CleanSpark, Inc. ($CLSK): 46,440 watchers.

The criteria applied to screen the stocks include:

Average volume of over 500,000

Domiciled in the U.S.

Upside potential of over 30% from current levels (based on average analysts’ price target)

Average analysts’ recommendation of Buy or better

Going by merely watcher counts, Marathon Digital Holdings, Inc. ($MARA) (144,957), Virgin Galactic Holdings, Inc. ($SPCE) (144,067) and FuelCell Energy, Inc. ($FCEL) (140,817) are the three most followed Russell 2,000 companies on Stocktwits.

Read Next: 2024 Presidential Election: India, Japan Rally, China Muted, Hong Kong, Europe Slump As Trump Wins A Second Term

For updates and corrections email newsroom@stocktwits.com 

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