Long Term Perspective

 

 

Small Cap stocks have historically shown greater returns than large cap stocks. This is a new index in the S&P family, but the Russell 2000 has a longer history and also measures the small cap sector.  Market capitalization roughly ranges from $20 million to $3 billion.  This index of 600 companies covers about 3 percent of the U.S. equities market. 

 

Just like the S&P 500 and the Midcap, the Small Cap index includes industrials, utilities, financials and transportation. A larger portion of the companies in this index is from the Nasdaq than for the other two index measures.

 

The S&P Small Cap index spiked 39.7 percent in 2013 after jumping 14.8 percent in 2012.  The ten-year average posted at 11.2 percent, compared to 11.0 percent in 2012.

 

Short Term Perspective

 

 

Like most other indexes, European sovereign debt concerns (on and off) caused swings during most of 2010 and 2011.  But an improving economy in the U.S. helped to offset some of these worries even though Congressional bickering over federal deficit legislation weighed on stocks in late summer of 2011.  In very early 2012, progress on European sovereign debt and mostly favorable economic news supported gains.  But worries about European debt swung the other way in at mid-year and the recovery slowed.  Fiscal cliff worries grew stronger December 2012 but favorable economic news at the start of 2013 lifted this index.  The upward trend was sidetracked at mid-year over Fed taper talk.  The index gained in latter 2013 as worries about the impact of Fed taper eased and economic news was moderately favorable.  But economic growth was sluggish in 2014 and problems overseas weighed on equities.

 

In September, the Small Cap index was up 4.5 percent on a year-ago basis compared to 17.3 percent the previous month. 

 

 

The Small Cap index dropped 5.5 percent in September after rebounding 4.2 percent in August.