Three New Tailwinds For Small Caps/Russell 2000
- By John Tierney
- 2 min read
Anyone watching equity markets yesterday surely noticed the Russell 2000 Index (+3.6%) robustly outperform the S&P 500 (+2.3%) and NASDAQ (-1.9%). Joe Biden’s election victory and Pfizer’s encouraging Covid-19 vaccine announcement together offer a promising prospect: normalization at last for smaller companies hit disproportionately hard by pandemic-related economic restrictions.
Less noticed might have been the October labour market report. The broader-based Household Survey showed total employment increased 1.5% in October, versus 0.45% for the widely followed Nonfarm Payroll Survey (Chart 1). Normally these surveys move roughly in parallel. The Household Survey includes non-payrolls workers, including freelancers, gig workers, and, of course, farm workers. Stronger job growth in this sector is another indication the US economy is opening up and activity is improving at smaller businesses.
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