Russell 2000 Winning Streak Longest in 20 Years
"Russell 2000 Winning Streak Longest in 20 Years"
in the news Russell 2000 Winning Streak Longest in 20 Years? What this all about..... See below.
Well this week was quite interesting on the stock market, the Russell 2000′s Winning Streak Longest in 20 Years
Investors are betting that President-elect Donald Trump will relax regulations, lower taxes and pump money into infrastructure projects
Perhaps nowhere else in financial markets is speculation on the ultimate success of Trompononics more rampant than in shares of small U.S. stocks.
Small company shares on Friday notch their longest winning streak in 20 years on a shortened Black Friday trading session. The Russell 2000 Index rose 0.4% in in the shortened session to book its 15th advance in row. This streak ties a run last seen in February 1996. The longest ever streak, 21, was hit back in 1988.
Big-cap stock benchmarks also booked all-time highs on Friday, as the S&P 500 and Dow Jones Industrial Average each rose 0.4%. Since the election, however, small caps are the clear winners.
So far, the Russell 2000 has climbed 12.7% since Election Day, compared with an advance of 3.5% for the S&P 500
Investors are betting that President-elect Donald Trump will relax regulations, lower taxes and pump money into infrastructure projects. Such policies should benefit small caps more than there larger brethren. For one thing, U.S.-based companies are best positioned to benefit from improving domestic growth that results from stimulus spending. Financial and energy companies, which carry significant heft in small-cap benchmarks, are likely to get a lift from dergulation, analysts say. What’s more, small-cap stocks tend to have the highest effective tax rates, since larger multi-national companies can defer U.S. taxes on profits earned overseas.
And. smaller companies also look well positioned should the anti-trade rhetoric voiced during the Presidential campaign season materialize in real policies, a headwind for multi-national companies that do big business abroad.
The price-to-earnings ratio of the Russell 2000 has jumped to 20.3 based on earnings over the past 12 months compared with 17.8 just before Election Day, according to FactSet. The current reading is near the highest recorded over the past 20 years.
For the S&P 500, the trailing price-to-earnings is up to 18.3 from 17.5 at the end of last month.
History suggests that long streaks of gains tend to keep going. We will see about that. On the heels of the 1996 streak of gains, the Russell 2000 was 2.2% higher after the first month and 8.4% higher over the next three months
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