Stock markets have been clawing back from the turmoil caused by Trump’s tariff announcements. The S&P 500 has made the strongest recovery but is still 3 percent off its February peak.
However, that collection of the 500 leading companies listed on stock exchanges has been outperforming another that tracks smaller name companies in the United States. An analysis of by an Evercore ISI team sees the potential for a catch-up to come, developing in the month of June reports MarketWatch.
Overlooked stock market that could outperform the S&P 500
The Evercore ISI team led by Julian Emanuel say that the month of June typically sees smaller-cap stocks outperform large-cap stocks. This “seasonality is especially pronounced” when the May outperformance by larger companies is as “vigorous” as it has been this year.
Large companies outperformed smaller companies by 9% during the month of May.
The analysts pointed out that the Fed is expected to cut rates even more and “the economy is forecast to grow modestly in 2025.” Furthermore, the Russell Index is set to be rebalanced after the close of trading on 27 June. All of this could provide an opportunity for investors.
Some names that they put forth to keep an eye on are Hims & Hers Health and Sprouts Farmers Market. The former got a lift in April when it joined up with Wegovy weight-loss drug maker Novo Nordisk. The latter, an organic grocery store, is a favorite of money managers as its products are produced domestically which will protect it from tariff disruptions.
However, they recommend getting broad exposure to small-cap stocks through the iShares Russell 2000 ETF.
This article is for informational purposes only and does not constitute investment advice. All investments carry risk, and past performance is not indicative of future results. If you are unsure about your investment decisions, you should seek advice from a qualified financial professional.
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