Small cap stocks are enjoying a spring thanks to the resilience of the US economy! The Russell 2000 has outperformed the S&P 500 for 14 consecutive days, achieving the longest winning streak since 1996.

Since the beginning of this year, small-cap stocks in the US have outperformed large-cap stocks on every trading day. On Thursday, the small-cap dominated Russell 2000 index closed up 0.8%, reaching a new closing high for the eighth time in 2026, and has outperformed the broader S&P 500 index for the 14th consecutive trading day, marking the longest winning streak for small-cap stocks relative to large-cap stocks since May 1996, during the early days of the internet bubble. Small-cap stocks were dominant at the beginning of the year. In a report released on Thursday, Goldman Sachs predicted that US economic growth will accelerate and exceed market expectations, while inflation will be lower than expected, and the Federal Reserve will continue to ease monetary policy. Goldman analyst Matthew Kaplan wrote, "We believe that the market has not fully priced in the strong momentum that the US economy may show next year, and in a cyclical rebound, small-cap stocks typically perform better." However, Markets Live macro strategist Tatiana Darie stated, "Despite signs of stabilization in the labor market and overall improvement in economic conditions, growth remains fragile. Small-cap stocks now need to demonstrate that this rapid rise is supported by profits in order to drive the index to new highs and continue to outperform the S&P 500 index driven by artificial intelligence." The strong performance of the Russell 2000 index comes at a time when enthusiasm for artificial intelligence in the market is cooling. Increasing concerns about rising corporate costs and unconfirmed profit potential are prompting traders to look for growth opportunities in other areas. With tech stocks lagging behind, small-cap stocks are benefiting. BTIG Chief Market Technical Analyst Jonathan Krinsky said, "Market leadership is clearly shifting, and although there may be pullbacks along the way, we hope to stand on the side of this new trend. In our view, this trend is still in its early stages."