Liz Ann Sonders, the Chief Investment Strategist at Charles Schwab & Co. (NYSE:SCHW) highlighted certain unusual divergences in the small cap markets.
Unprofitable Small-Caps Lead The Rally
On Thursday, in a post on X, Sonders broke down the composition of the Russell 2000 index and the performance of its constituents, highlighting that “57% of index is currently profitable,” while “41% of index is currently unprofitable,” and “2% of index doesn't currently have earnings data available.”
She noted that the stocks losing money have been leading the charge higher in recent months. Since the Russell 2000's April 8 closing low, the profitable stocks on the index are up 22%, while the loss-making stocks are up 53%.
| Stocks | Year-To-Date Performance | Latest Quarterly Loss |
| ThredUp Inc. (NASDAQ:TDUP) | +549.65% | $5.2 Million (Q2) |
| Opendoor Technologies Inc. (NASDAQ:OPEN) | +411.95% | $29 Million (Q2) |
| Vigil Neuroscience Inc. (NASDAQ:VIGL) | +373.53% | $26.7 Million (Q2) |
| Ramaco Resources Inc. (NASDAQ:METC) | +332.59% | $14 Million (Q2) |
| AST SpaceMobile Inc. (NASDAQ:ASTS) | +301.06% | $99.4 Million (Q2) |
| Digital Turbine Inc. (NASDAQ:APPS) | +284.66% | $14.1 Million (Q1) |
See Also: Wall Street Hits Record Highs As Rate Cut Bets Offset Shutdown: This Week In Markets
Russell 2000 Outperforms The S&P 500
As of Thursday’s close, the Russell 2000 index, which primarily tracks small-cap U.S. equities is up 40.2% since its 52-week low on April 8th, following the “Liberation Day” tariffs. The S&P 500, on the other hand, is up 39.2% during the same period.
The small cap index, tracked by the iShares Russell 2000 ETF (NYSEARCA: IWM) touched an all-time high last month, following the 25-basis point interest rate cut by the Federal Reserve. The rate cut offered much-needed relief for smaller companies by lowering borrowing costs amid tough macroeconomic conditions.
The S&P 500, tracked by the SPDR S&P 500 ETF Trust (NYSE:SPY) was down 0.29% on Thursday, and is up 0.07% in overnight trade. The iShares Russell 2000 ETF was down 0.64% on Thursday, and is currently up 0.18% overnight.
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