The small-cap U.S. stock index has risen 20% year to date, outpacing the S&P 500 and major tech shares, though analysts warn the rally is being led by unprofitable companies.
The Russell 2000 has climbed 20% year to date, putting the small-cap U.S. stock benchmark on track for its strongest performance since 2003. The gain compares with a 10% rise in the S&P 500 and an increase of less than 3% for the "Magnificent Seven" group of major technology stocks, underscoring a rotation away from the market’s biggest names toward smaller companies. Analysts, however, caution that much of the advance in small- and mid-cap stocks is being driven by unprofitable companies, a pattern that is raising concerns about excessive optimism and possible bubble risks.