Small-Cap Stocks Shine While Large-Caps Stall

Investors have witnessed a remarkable shift in the equity market dynamics this year, with small-cap stocks like Abercrombie & Fitch (ANF) basking in the limelight of soaring year-to-date market capitalizations. This surge is fueled by a pronounced rotation from the once-dominant large-cap stocks in the U.S. market, such as the S&P 500 and NASDAQ Composite.

The Russell 2000 (RTY) index, the quintessential benchmark for small-cap stocks, has experienced a resurgence, marking a second consecutive week of growth with a 1.5% uptick. However, despite this encouraging momentum, the rally faced some headwinds, tempering the exuberance that had characterized its recent climb.

Notably, small-caps have been attracting significant investor interest, with small-cap funds attracting a hefty $9.9 billion in inflows over the past week, according to Bank of America, citing data from EPFR, marking the second-largest weekly influx on record.

Insmed Leads the Small-Cap Charge

Among the standout performers within the Russell 2000 constituents is Insmed (INSM), a biotech company specializing in rare pulmonary diseases. Insmed has not only witnessed a substantial surge in its stock price but has also seen its market capitalization balloon from $4.3 billion in 2023 to a staggering $11.3 billion in the current year. The stock price of Insmed has surged by a remarkable 145% year-to-date—an impressive turnaround from a nearly 29% loss experienced in late May.

Market Cap Surges for Top 10 IWM Stocks

Delving deeper into the small-cap landscape, the top 10 most valuable stocks in the iShares Russell 2000 ETF (IWM) have witnessed substantial market cap expansions since the beginning of the year:

• Insmed (INSM) – Market cap: $11.3B – Market cap in 2023: $4.3B
• FTAI Aviation (FTAI) – Market cap: $10.3B – Market cap in 2023: $4.65B
• Vaxcyte (PCVX) – Market cap: $8.66B – Market cap in 2023: $5.98B
• Fabrinet (FN) – Market cap: $8.58B – Market cap in 2023: $6.91B
• Sprouts (SFM) – Market cap: $8.31B – Market cap in 2023: $4.89B
• Fluor (FLR) – Market cap: $8.2B – Market cap in 2023: $4.89B
• Abercrombie & Fitch (ANF) – Market cap: $8.02B – Market cap in 2023: $4.45B
• Lantheus (LNTH) – Market cap: $8.02B – Market cap in 2023: $4.25B
• Applied Industrial Technologies (AIT) – Market cap: $8.01B – Market cap in 2023: $4.25B
• Ensign Group (ENSG) – Market cap: $7.7B – Market cap in 2023: $6.28B

Small-cap ETFs, including (IJR), (VB), (VBR), (SPSM), and (DFAS), further exemplify the growing significance and attractiveness of this segment in the current market environment.