John Hancock: Weekly Market Recap Week Ended February 5th
Small-cap stocks extended their recent run of outperformance relative to their large-cap peers, as the Russell 2000 Index, a small-cap benchmark, posted a nearly 8% gain to set another record high. Since the end of September 2020, the Russell 2000 has surged 48%.
The major U.S. stock indexes posted weekly gains from around 4% to 6%, more than making up for the previous week’s losses. The S&P 500 and the NASDAQ set new record highs, eclipsing their levels from a couple weeks earlier, while the Dow was just 0.001% shy of its record.
Earnings momentum shift
Fourth-quarter earnings results continued to improve, and U.S. companies are now expected to report a modest overall earnings increase, rather than the small decline that had been forecast just a week earlier. With results in from 59% of companies in the S&P 500 as of Friday, earnings were projected to end up 1.7% higher than they were a year earlier, according to FactSet.
The Cboe Volatility Index, which measures investors’ expectations of short-term stock volatility, tumbled by about 37% for the week, returning to roughly the same level that it had been at prior to a sharp increase in the previous week. The index’s surge in late January came amid frenzied trading in a handful of small-cap stocks.