It’s a busy week for earnings and economic news. But, don’t forget about one the year’s strongest areas in the market.
We’re talking about small-cap stocks, tracked by the iShares Russell 2000 ETF (IWM). Its 9 percent gain so far this year makes it the second-best major index behind the Nasdaq-100. IWM also hit a new all-time high in June — something the larger-cap S&P 500 and Dow Jones Industrial Average benchmarks haven’t done since January.
Investors usually associate small caps more with the domestic economy than the global economy. That’s shielded them from worries about tariffs and trade, unlike the kind of big companies populating the Dow and S&P.
It could also focus attention on the Commerce Department’s announcement of gross domestic product on Friday morning. Economists forecast growth near 4 percent, the strongest in almost four years. The following week brings key monthly payroll and manufacturing data. (Click here for Market Action’s trader-friendly calendar.)
Chart watchers may also notice a tightening range on IWM following its springtime rally. This isn’t a trade recommendation and everyone needs to do their own homework. But some traders may wonder if this isn’t a bullish triangle with the potential for a breakout to new highs as the economic reports trickle out.