Canadian small cap AI should improve in the coming months.Its starting in the US, and will melt up to Canada. In light of what investers are doing in the good old USA. The small-cap Russell 2000 index RUT — made up of the smallest 2,000 companies in the broader Russell 3000 RUA by market capitalization — was up 2.6%, on track for its highest close since March 8, according to Dow Jones Market Data.
The small-cap gauge has been left behind in 2023, gaining around just 5.2% so far in 2023 versus an 11.4% rise for the large-cap benchmark S&P 500 SPX and a 26.6% jump for the tech-heavy Nasdaq Composite COMP. Both large-cap indexes have seen gains driven by highflying, megacap tech stocks in 2023.
Those gains mean the eight biggest megacap tech stocks now account for nearly 28% of the market-cap-weighted S&P 500 and nearly 55% of the tech-concentrated Nasdaq-100 NDX, noted Louis Navellier, founder of Navellier & Associates.
Small-caps were flipping the script on Tuesday.
The Russell 2000 was outperforming the S&P 500 by more than 2.3 percentage points, its biggest such gap since Nov. 1, 2021. The Russell 2000 was rallying 2.5% while the Dow sank around 50 points, or 0.2%.
The expectation “is that either the small-cap stocks in the Russell 2000 and microcap indices will ‘catch up’ or the eight big megacap technology stocks will ‘crash and burn,’” Navellier said, in emailed comments.
“Since the ChatGPT and AI craze is boosting Microsoft MSFTand Nvidia NVDA, plus making Google GOOG GOOGL very nervous as alternative search engines materialize, I think the rest of the stock market is expected to ‘catch up’ as the breadth and power of the overall stock market improves in the upcoming months,” he wrote.
In One Chart: Small-cap stocks lag in 2023, but here’s where they’re ‘finally’ starting to see positive earnings revisions
The more cyclically oriented Dow Jones Industrial Average DJI, meanwhile, has lagged behind the Russell 2000, up just 1.1% so far this year.
The last time the Russell 2000 gained more than 2.5% and the Dow finished the day lower was on Oct. 10, 2008, according to Dow Jones Market Data.
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