The iShares Core S&P Small-Cap ETF (NYSEArca: IJR) and the iShares Russell 2000 ETF (NYSEArca: IWM) are off an average of 2% over just the past week, highlighting the laggard status of smaller stocks against their larger peers to start 2017.

Following Election Day, investors flocked to IWM, IJR and rival small-cap ETFs as markets priced in President Donald Trump’s “America First” mantra that would help domestically-oriented companies led the next leg in economic growth.

Expansionary fiscal policies have fueled inflation expectations, which have in turn raised bets on a Federal Reserve interest rate hike and strengthened the U.S. dollar. Consequently, with a stronger U.S. dollar, large-cap stocks may underperform as many large exporters find it harder to sell goods to foreign markets.

However, the market’s enthusiasm for small-caps has recently waned in dramatic fashion prompting some traders to call for more downside for the group.

“The IWM ETF that tracks the Russell opened Monday trading at $132.76, after peaking at $140.86 at the beginning of March. For Todd Gordon of TradingAnalysis.com, the recent slip is highly significant, as it took the ETF below its recent range of $133 to $135,” reports CNBC. “Currently, he sees the next range of support at the $126 to $128 zone — a prior zone of resistance. That is “a key decision point” on the charts, according to the trader.”

Subscribe to our free daily newsletters!
Please enter your email address to subscribe to ETF Trends' newsletters featuring latest news and educational events.