Amid last week’s selloff in U.S. equities that saw the Dow Jones Industrial Average post five losing sessions in a row, the markets were even rougher for small cap stocks as the Russell 2000 posted its worst week in 2019.
Wednesday, March 6 saw the index, which is a prime measure of small cap stock performance, fall 2 percent. This is a cause for concern to some analysts since a majority of small cap companies derive their revenue sources domestically, and their performance correlates well with investor confidence.
The trailing 1-week trailing total return for the iShares Russell 2000 Value ETF (NYSEArca: IWM) showed a 1.61 percent decline. Similarly, the iShares Russell 2000 Value ETF (NYSEArca: IWN) fell 2.02 percent and the iShares Russell 2000 Growth ETF (NYSEarca: IWO) was down 1.24 percent in their 1-week trailing total returns.
Overall, however, all three are in the green thus far in 2019–IWM is up 17.09 percent year-to-date, while IWN is up 15.23 percent and IWO is up 18.77percent.
“Small-caps remain a very key component of the market’s comeback story,” said Frank Cappelleri, executive director at Instinet LLC, a Nomura company. “Seeing demand reignite in the most speculative names would give us a strong indication.”
“If the divergence we’ve seen play out over the last two weeks continues, that’s a telling sign,” Cappelleri added.