Core Viewpoint - The recent strong performance of the Russell 2000 is largely attributed to rising expectations of interest rate cuts by the Federal Reserve, rather than the earnings outlook for small-cap stocks [1] Group 1: Market Outlook - The Royal Bank of Canada holds a "neutral" view on small-cap stocks in the U.S. over the next 6 to 12 months [1] - Small-cap stocks typically require either a complete recession or a very hot economic environment to perform exceptionally well, conditions that are currently lacking [1] Group 2: Valuation Metrics - The proportion of companies within the Russell 2000 with negative earnings is at a historical high [1] - The price-to-earnings ratio for the Russell 2000 stands at 16.3, which is above the average level, indicating limited investment opportunities [1]