U.S. small-cap stocks have recently outperformed large-cap stocks, reversing a long period of underperformance. This rally is supported by accelerating earnings growth in small-cap companies, driven by factors such as lower interest rates, reduced trade uncertainty, improved lending, fiscal stimulus, and the broadening benefits of artificial intelligence. T. Rowe Price’s Asset Allocation Committee views this small-cap rally as durable and has increased its overweight position in U.S. small-cap stocks.
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Are U.S. small-caps finally back?
U.S. small-cap stocks have recently outperformed large-cap stocks, reversing a long period of underperformance. This rally is supported by accelerating earnings growth in small-cap companies, driven by factors such as lower interest rates, reduced trade uncertainty, improved lending, fiscal stimulus, and the broadening benefits of artificial intelligence. T. Rowe Price’s Asset Allocation Committee views this small-cap rally as durable and has increased its overweight position in U.S. small-cap stocks.