Small-Cap Stocks Jump After Trump Election Win

Small-cap stocks rose broadly Wednesday, outperforming the leading market indexes in the wake of Donald Trump’s victory in the presidential election. 

The Russell 2000 (RUT) index of smaller companies was recently up more than 4%, outpacing gains seen in the S&P 500, Dow and Nasdaq. Several Russell companies posted large gains, with roughly a dozen recently up about 20% or more. 

Both the Russell and benchmark S&P are up this year, but today’s move narrows the S&P’s outperformance. It also has the Russell at year-to-date highs — and levels last seen in late 2021. 

The economic environment is generally seen as favorable to smaller companies, which are more sensitive to broader conditions. The Federal Reserve is also expected to cut rates again on Thursday; lower interest rates are generally understood to benefit companies that, like small caps, often carry more debt. 

Some analysts have also speculated that a Republican win could mean lower corporate tax rates that might particularly benefit smaller firms.