The Russell 2000 rose 2% in the week ended Oct. 23, snapping six straight weekly declines, its longest losing streak since 2018, while the S&P 500 and Nasdaq 100 both fell. The author links the divergence to the 10-year Treasury yield, which has fallen from a 5.36% peak in early October to below 5% as AI spending concerns drove a flight to safety, and notes that small-caps have been about twice as sensitive to Treasury yields as large-caps, according to State Street. Small-cap earnings are expected to grow more than 20% year over year, while the Russell 2000 trades at around 18 times earnings. The risk is that futures still price in two or three more quarter-point rate hikes by mid-2027, and a reversal in long-term yields could quickly fade any rebound. The iShares Russell 2000 ETF (IWM) is about 9% below its August all-time high.
Summary written by Upside AI from the original article. Read the source for full details.
Read the original on Yahoo Finance ↗
Keywords
small capsinterest ratesbondsvaluationSPY
Open a keyword to see other news on the same topic.
Related tickers and likely impact
SPY
▲ Likely positiveSPDR S&P 500 ETF
Relevance: low
| Market | US stocks |
|---|---|
| Sector | ETF |
| Close on 10/28/2026 | 772.35 |
| Change that session | +0.35% |
Impact is scored by AI from the headline and may be wrong. It is not investment advice.
Related news
- ‘The Major Ones All End Badly’: Pulitzer-Winning Crash Historian on US Stocks at 250% of GDP
Pulitzer-winning historian Liaquat Ahamed warns that US equities, including private equity, sit at 250% of GDP after a trillion dollars flowed in from foreigners over the past 12 months, and that such booms usually end badly once rising rates choke off cheap financing. He points to a 150-basis-point rise in real rates, with the 10-year Treasury yield at 5.19% on October 14, 2026, and compares today's AI spending with the 1873 railroad bubble, which was financed largely by bonds. The article highlights NVIDIA, with a $5.2 trillion market cap, whose 2.32% earnings yield trails the 5.09% yield on the 10-year Treasury.
- Small caps pops as market rally broadens beyond Big Tech
- Small Stocks Lead the Pack in Broad Market Rally
- Why smaller stocks face worse prospects than the S&P 500 in the coming years
- Small - cap stocks quietly slide into correction territory
The Russell 2000, which tracks small-cap stocks, fell into correction territory on Wednesday, finishing 11% below its Aug. 14 record close and down 2.8% for the week, slightly worse than the Nasdaq's 2.5% drop. Hotter-than-expected inflation reports and bets that the Federal Reserve will raise rates at least once more before year-end are weighing on the group, while small business sentiment deteriorated, with the NFIB Small Business Optimism index falling to 97.9 in September from 98.7 in August. BCA Research said smaller firms are not yet feeling the bite from higher rates, though the impact may show up with a lag, and legendary investor Paul Tudor Jones warned that next year 'is going to be really, really challenging' for stocks.
- The S&P 500 Is Just Shy of a Record With 10 Weeks Left in the Year: Here's What History Says Could Happen Next
The S&P 500 closed at 7,757.17 on Oct. 21, about 0.8% below its record close of 7,818.93 on Oct. 6, with around 10 weeks left in the year. The index is up about 13% in 2026, even after the Federal Reserve raised its benchmark rate in September for the first time in over three years. Reviewing daily closes back to 1928, the author found 16 years in which the index was within 1% of a record on Oct. 21, and all 16 set at least one new record close before year-end. A new high did not guarantee a strong finish, however: from Oct. 21 to year-end the index fell in 1964 and 1968, and the median year gained about 4%. The article also flags risks, including the 10-year Treasury yield topping 5.3% in early October and a rally concentrated in a narrow set of AI-linked stocks.
Related markets
Latest news
- CRWV, NBIS, IREN, APLD Stocks Drop After Microsoft Capex Falls Short On Delayed Third-Party Capacity
Neocloud stocks fell overnight after Microsoft reported fiscal Q1 CapEx of $45.2 billion, up about 30% year on year but below the $50.7 billion StreetAccount estimate and its own target of around $50 billion. Microsoft blamed delays in some third-party cloud capacity under contract, and CFO Amy Hood said CapEx would exceed $50 billion in Q2 and about $170 billion for the calendar year. Alphabet's Q3 CapEx of $51.36 billion also came in below the $55.09 billion expected, which investors read as a sign that capacity ramp-up at neocloud firms could slow. CoreWeave fell 5.8%, Nebius 6.3%, Iren 5.3% and Applied Digital 4.3%, while Iren had raised $363 million by refinancing recently purchased AI computing equipment through a six-lender syndicate. Bank of America also disclosed a 4.1% stake in Iren.
- MITTI LABS & SALESFORCE PARTNER TO SCALE WATER-SAVING RICE FARMING PRACTICES THAT REDUCE METHANE EMISSIONS
Mitti Labs announced a five-year carbon credit offtake agreement under which Salesforce will purchase 500,000 satellite-verified methane reduction credits by 2030 to support climate-smart rice farming across tens of thousands of smallholder farms in India. The practice, alternate irrigation, lets fields dry out during safe windows and can cut methane emissions by up to 50% and water use by up to 40% without affecting yields. Mitti Labs' agreement with Google came just weeks earlier, and the company plans to issue 2 million credits per year by 2028 from projects in India and Southeast Asia. Each credit is backed by field-level evidence, and the GeoAI platform, developed with NASA support, uses satellite radar and ground data to track flooding, soil moisture and crop health on individual plots.
- Broadcom Stock Is 29% Below Its Record. After Its New Anthropic Deal, I'd Consider Buying It a Little at a Time.
Broadcom stock has been nearly flat in 2026, trading around $342 and about 29% below its June 2 record close of $481.57. Bank of America, Blackstone, Citigroup and Morgan Stanley are providing $63 billion in funding to a new special purpose vehicle that will buy Broadcom's AI chips and lease them to Anthropic, with deliveries from 2027. Broadcom still keeps part of the risk, with maximum potential liability of about $43 billion in an SEC filing, and the combined liability caps of this deal and June's $35 billion financing come to about $72 billion. Broadcom reported a record $13.7 billion of free cash flow in fiscal Q3 2026. The author says the price already allows for much of the customer and financing risk and would consider buying shares a little at a time.
- Big Funds Buy the Dip in Gold, Silver After Sharp Selloff
After a sharp correction in precious metals, SPDR Gold Trust bought 1.7 tonnes of gold on Oct. 28, lifting holdings to about 1,043 tonnes, its second straight day of net buying. iShares Silver Trust (SLV) added about 42 tonnes of silver, bringing its total to 15,542 tonnes. Gold closed around 4,067 USD/ounce after rising for a third straight session, while silver was near 54 USD/ounce. The Fed held rates at 3.75%-4%, with a 10-2 vote; two members wanted a 25 basis point hike. Futures markets priced about an 83% chance of another 25 basis point hike at the Dec. 8-9 meeting, and the article notes higher rates could pressure gold and silver, with Q3 GDP and September PCE data being watched.
- Vietstock Technical Analysis: 10 Hot Stocks on 29/10/2026
Vietstock's technical analysis team highlights 10 hot stocks for short-term reference, namely CTG, CTD, EIB, GEX, HDB, STB, SAB, VNM, VCB and VIC, selected by market capitalisation, liquidity and investor interest. CTD has moved above its 50-day and 100-day SMAs and is near the upper Bollinger Band, with a Triangle pattern formed in early October 2026 and a price target of 73,000-74,000. HDB rose sharply on 28/10/2026 with a Big White Candle and broke its May 2026 high on volume well above its 20-day average, while VIC extended gains to six consecutive sessions but needs volume above its 20-day average to confirm the recovery. EIB formed a Three Black Crows pattern as it kept falling, while GEX rebounded with a Hammer candle on volume below its 20-day average, indicating caution among investors. The report also notes support zones based on earlier lows for STB (58,000-63,000), SAB (39,300-41,300), VNM (54,500-57,500) and VCB (52,600-56,000).
- Gelex Exceeds Full-Year Profit Plan After 9 Months
Gelex reported 9-month pre-tax profit of VND 3,931 billion, exceeding its full-year profit target by 8.8%, on consolidated net revenue of VND 39,158 billion, up 40.5%. In Q3, net revenue reached VND 13,957 billion, up nearly 42%, while pre-tax profit was VND 1,316 billion, up over 5%. Growth was driven by electrical equipment and industrial park infrastructure, with core profit at Gelex Electric (GEE) up 32%. Total assets stood at VND 83,379 billion as of Sept. 30, and VIS Rating kept its long-term rating at A with a positive outlook.
Get the briefing on Telegram or Zalo
Join the Upside Telegram channel or Zalo group for the Vietnam stocks and gold briefing at 8:00 and 19:00 (Vietnam time) on trading days, plus a weekly wrap on Saturday morning.