The Russell 2000 index hit an all-time high on Monday, buoyed by expectations of tax cuts under the second Donald Trump administration and optimism about further rate cuts by the Federal Reserve.
The index represents the performance of approximately 2,000 small-cap companies in the United States. It is a subset of the Russell 3000 Index, which includes the 3,000 largest U.S. companies by market capitalization.
In intraday trading, the index reached 2,466.39 points, surpassing the previous record of 2,437.08 set in November 2021. At market close, the index was at 2,422.03 points, up 1.47% . Over the past year, the index has gained 35.58%.
Small-cap stocks have attracted a lot of attention since the Federal Reserve began easing monetary policy in September, as lower borrowing costs are expected to disproportionately benefit smaller companies. Since the November 5 US presidential election, the Russell 2000 Index has risen more than 8%, reflecting investor confidence in political changes that favor deregulation and lower tax burdens.
By comparison, the S&P500 is up 31.58% over the past year, or 3.5% since Nov. 5.
Analysts point out that small-cap companies, often more domestically focused, will benefit from Trump’s proposed economic policies, including import tariffs and less stringent regulations.