Small-cap stocks, which are sensitive to sentiment on the overall U.S. economy, have stalled out recently within range of their 2007 peak.
U.S. small-business confidence levels are also declining, according to a report this week. Small-cap exchange traded funds (ETFs) could slide if the outlook holds true, even as small-caps hover around four-year highs. [Small-Cap ETFs Fall Short of 2007 High.]
The National Federation of Independent Business’s (NBIB) optimism index fell to 91.9 in March from 94.5 in February due to a poorer outlook on sales, profits and the economy and increasing costs for oil and raw materials, reports Shobhana Chandra for Bloomberg. The optimism index hit a five-month low in March.
The gauge on expectations for better business conditions in six month’s time fell 14 points to a net minus 5% from 9% in February. Additionally, the gauge for whether it is a good time for small businesses to expand also diminished 2 points to a net 5%.
William Dunkelberg, the organization’s chief economist, believes that price increases due to the liquidation of inventory excesses is “over and profits are badly in need of some price support.”