The gap between small-cap and large-cap U.S. stocks is the worst in more than 20 years

Relative to the stocks of large companies, U.S. small-cap stocks are experiencing their worst performance in more than 20 years. Since the start of 2020, the Russell 2000 has risen 24%, lagging the S&P 500’s gains of more than 60% over the same period. In recent years, there has been an unusually wide gap between the two indices, as small-cap stocks with relatively weak balance sheets and weak pricing power have been particularly affected by high inflation and sharply rising borrowing costs, analysts said. Greg Tuorto, small-cap portfolio manager at Goldman Sachs, said: "We haven’t seen big money coming into this space since 2016 or 2017. "The S&P 500 has climbed steadily since early November, while small-cap stocks accelerated their rally in the final months of 2023 but have weakened so far this year, widening an already disparity in performance.