Small-cap stocks continue to quietly outperform in the current market.
The Russell 200 index is up 13% so far in 2026. That’s nearly double the 8% year-to-date return of the benchmark S&P 500 index that is comprised of mid and large-cap stocks.
The small-cap stock index is keeping pace with the technology-heavy Nasdaq (NASDAQ: $NDAQ) that has gained 14% this year as artificial intelligence (A.I.) leads a market rally.
The blue-chip Dow Jones Industrial Average comprised of leading U.S. stocks is up only 3% this year.
The Russell 2000 is a stock benchmark that tracks the performance of approximately 2,000 small-cap U.S. companies.
Over the past 12 months, the Russell 2000 has posted a 37% return, its best performance in more than a decade.
Small-cap stocks are considered any security that has a market capitalization of $10 billion U.S. or less.
Leading small-cap stocks include companies such as clothing retailer The Gap (NYSE: $GAP) and restaurant operator Brinker International (NYSE: $EAT) to crypto miner CleanSpark (NASDAQ: $CLSK).
Analysts say small-cap stocks continue to perform well as investors look to diversify their portfolios and seek out securities that aren’t overvalued.
Risks to the small-cap rally include a potential downturn in the U.S. economy and rising inflation, which could lead to higher interest rates.
Smaller companies are more dependant on loans to fuel their operations and growth and can be more susceptible to higher interest rates than larger, more established companies, say analysts.
For now, the rally in small-cap stocks continues unabated.
