Sumary of Is Russell 2000 About to Stage a Comeback? Will a Cyclical Relief Help IWM?:
- On the flip side, when inflation runs hot, it is supply driven and economic activity starts to disappoint, small-caps don’t tend to perform well as mounting price pressures eat into profit margins rapidly.
- In early summer, as U.S. CPI touched its highest levels in a generation and delta-variant fears caused output to start downshifting, the specter of “stagflation” spooked investors, prompting traders to cut exposure to cyclical stocks.
- This fear, whether justified or not, was probably responsible for the Russell 2000’s poor performance over the past few months (the Russell 2000 is a cyclically oriented small-cap index).
- IWM – A PROXY FOR THE RUSSELL 2000One way to trade equity indexes is via ETFs.
- When looking at the Russell 2000, the IWM ETF tracks its performance and its generally used as the small-cap index’s proxy.