Small Cap Stocks Notch Longest Winning Streak Since 2023

Small-cap stocks on Friday notched their longest stretch of positive weeks since 2023 as markets continued to rally on optimism about a cooling of the global trade tensions that had roiled financial markets.

The benchmark Russell 2000 closed out its sixth consecutive week of gains on Friday, its longest streak since December 2023 when slowing inflation pushed Treasury yields lower and boosted optimism the Federal Reserve would cut interest rates the following year. 

Stocks were buoyed this week after the U.S. and China agreed to slash tariffs on each other’s imports for 90 days as officials negotiate a more comprehensive trade deal. The Russell 2000 jumped after that agreement was announced Monday, erasing all of its post-“Liberation Day” losses. 

Small-cap stocks have been hit particularly hard by President Trump’s economic policies. The Russell 2000 lost nearly a quarter of its value between Trump’s inauguration and the day he paused most tariffs for 90 days. Meanwhile, the Russell 1000, which represents the top 1,000 companies by market cap in the U.S., slid about 18% over the same period.

Smaller companies are expected to have a harder time adapting to tariffs than their larger competitors, whose scale gives them leverage to negotiate prices along the supply chain. Larger companies also often have easier access to capital, which can be essential for weathering disruptions.

Despite their recent rally, small caps still lag their large-cap peers. The Russell 2000 is down 5% year-to-date, while the Russell 1000 has inched up 1%. The small-cap index has also trailed the performance of the benchmark S&P 500 index and the Dow Jones Industrial Average, which are both in positive territory for 2025.