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Stocks with smaller market values are outperforming by a wide margin so far this year, and strategists and analysts alike say small caps should continue to lead the way as the economic recovery gains steam.
"The U.S. economy is currently trending toward high-single digit GDP growth in 2021 as COVID-19 vaccine distribution expands and we gradually emerge from the pandemic," says Lule Demmissie, president of Ally Invest. "That environment favors small-cap names, which tend to have a more domestic focus than larger multinational firms."
Small caps tend to outperform in the early parts of the economic cycle, so it should come as no surprise that they are clobbering stocks with larger market values these days.