If small-caps do the leading in January AND the broader market finishes the month higher, history shows there is an excellent chance stocks will finish the year on an up note. [ETFs for the January Effect]
“The S&P 500 notched a record high of 2,130.82 on May 21 as middling economic data eased expectations for a rate hike from the U.S. Federal Reserve. But three months later, the benchmark had fallen into correction territory, a drop of 10 percent from its high, when signs China’s economy may be slowing faster than expected unnerved investors and a Fed rate hike drew closer,” according to Reuters.
Smaller companies are a play on the domestic economy. While previous economic reports have been less than appealing, economists expect the gross domestic product to accelerate in the second half of the year. [Mid-, Small-Cap ETFs to Focus on U.S. Growth]
iShares Russell 2000 ETF
Tom Lydon’s clients own shares of IWM.