Wall Street has been wavering in 2025-end due to overvaluation concerns in artificial intelligence (AI) stocks. The U.S. labor market has shown signs of weakening, and consumer sentiment has remained somewhat muted.U.S. retail sales rose only 0.2% sequentially in September 2025, marking the smallest increase in four months, and below forecasts of a 0.4% gain, per tradingeconomics. This further points toward the fragile consumer spending behavior.Why the AI Bubble Is Unlikely to Burst NowDespite economic unc ...

Photo by BeInCrypto The Russell 2000 Index, which comprises approximately 2,000 small-cap companies, has long served as a barometer of investor appetite for growth and high-risk equities. Analysts quickly noticed its correlation with the crypto market. When risk-on sentiment spreads into the crypto market, it can help push Bitcoin and altcoins higher. The details below illustrate how this dynamic unfolds. Russell 2000 Flashes a Breakout Signal, Raising Hope for Crypto If the S&P 500 represents large-cap ...

Investors concerned about volatility tied to the Dec. 10 Fed rate-cut decision can stake out a position with options on the small-cap iShares Russell 2000 ETF. ...

Group 1: BlackRock, Inc. - BlackRock was highlighted as a strong investment opportunity following its robust third-quarter results, with CEO Larry Fink predicting rapid growth in the cryptocurrency market due to the firm's development of proprietary tokenization technology [2] - The company reported diluted EPS of $8.43, or $11.55 on an adjusted basis, and assets under management increased to $13.5 trillion, reflecting a 17% year-over-year growth [2][6] - BlackRock's shares rose by 0.7% to close at $1,202.59 on Wednesday [6] Group 2: Other Companies - SoFi's Liz Young Thomas selected iShares Russell 2000 ETF as a notable investment, which saw a 1% increase during the session [3][6] - Victoria's Secret & Co. was named by Stephanie Link as a final trade, with shares gaining 3.2% to close at $30.39; Telsey Advisory Group raised its price target from $24 to $29 [3][6] - Teradyne, Inc. was chosen by Joseph M. Terranova, with analysts expecting a quarterly earnings report of 79 cents per share, down from 90 cents per share a year earlier, and projected revenue of $744.2 million [4]

Core Insights - Small caps are experiencing a resurgence, with significant potential for dividends, specifically a 7.1% payout being highlighted as an opportunity [2][8] Small Cap Performance - Small caps have historically underperformed compared to large caps, but recent trends indicate they are now matching or even surpassing large caps in performance, as evidenced by the iShares Russell 2000 ETF [3] Advantages of Small Caps - Small firms maintain strong client relationships, benefiting from customer loyalty and directly profiting from the strength of the US economy, providing a hedge against global economic issues [4] Dividend Challenges - Many small caps are in early growth stages and may not be able to offer dividends while funding their expansion, contrasting with larger companies that typically provide more consistent dividends [5][6] Investment Strategy - The focus has been on closed-end funds (CEFs) that invest in large caps and high-yield bonds, which have historically provided higher returns and dividends compared to small caps [7] Exception in Small Caps - The Royce Small-Cap Trust (RVT) is noted as an exception, offering a 7.1% dividend while closely tracking small cap performance [8] Fund Structure and Holdings - RVT invests in a diverse portfolio of 488 small caps, with top holdings including IES Holdings, Assured Guaranty, and SEI Investments, all showing strong revenue growth [9][10] Dividend Flexibility - RVT's dividend is not fixed but floats based on the net asset value (NAV), allowing for potential increases in payouts as NAV rises, which has been consistent over the past five years [11][12] Market Position - RVT is currently available at a 9.2% discount to NAV, indicating potential for upside as the discount has decreased from higher levels earlier in the year [12][13]

Core Viewpoint - The small-cap segment of the US stock market has been experiencing a rally, but investors remain cautious and are quickly taking profits due to past underperformance and volatility [1][2][4]. Group 1: Market Performance - The iShares Russell 2000 ETF has seen $5.4 billion withdrawn this year, despite the Russell 2000 index reaching an all-time high [2]. - Small caps have underperformed larger companies since the pandemic, particularly during the 2022 bear market, and have struggled to rebound in the subsequent bull market [3][4]. - The Russell 2000 was the last major US equity index to reclaim its all-time high, taking four years to do so, while the Nasdaq 100 surged approximately 50% during the same period [6]. Group 2: Investor Sentiment - Recent positive flows into small caps in September have not been sufficient to offset earlier losses, reflecting a lack of confidence among investors [4]. - Investors are reportedly taking profits quickly, as historical trends show that small caps often do not maintain outperformance over large caps [5]. - Despite a recent run of weekly gains for small caps, there remains a sense of skittishness among investors regarding the sustainability of this performance [7][8].

Core Insights - Small-cap U.S. stocks are showing signs of a potential comeback after a prolonged period of underperformance, although it remains uncertain if this is the beginning of a sustained rally or a temporary rise [1] Performance Overview - The iShares Russell 2000 index has increased by 11% over the past three months as of September 25, 2025, compared to a 7.6% gain in the S&P 500. However, year-to-date performance shows the iShares Russell 2000 ETF (IWM) up 8.2%, lagging behind the SPDR S&P 500 ETF Trust (SPY) which is up 12.6% [2] - The early-year weakness in small-cap stocks was largely attributed to President Trump's announcement of higher tariffs in April, which adversely affected smaller companies [2] Economic Factors - The Federal Reserve's decision to cut interest rates by 25 basis points in September and the indication of two more cuts this year could benefit small-cap stocks, with an 87.7% probability of another 25-bp cut in October [3] - The U.S. economy experienced a robust growth rate of 3.8% in Q2 of 2025, driven by stronger consumer spending, marking an upward revision from a previous estimate of 3.3% [4] - The positive economic growth is favorable for small-cap stocks, which are closely tied to the domestic economy [5] Valuation Metrics - As of September 19, 2025, the Russell 2000 is trading at a P/E ratio of 34.65, significantly higher than the year-ago level of 25.12, indicating that small caps may be overvalued [6] - In comparison, the Nasdaq 100 is trading at a P/E ratio of 32.65, and the S&P 500 at 25.30, suggesting that small-cap stocks are not cheap relative to other indices [7] ETF Performance - Notable small-cap U.S. ETFs that have performed well in Q3 include: - Fidelity Enhanced Small Cap ETF (FESM) – up 15.5% - Invesco S&P SmallCap 600 Pure Value ETF (RZV) – up 14% - Vanguard Russell 2000 Value ETF (VTWV) – up 13.6% - First Trust Small Cap Core AlphaDEX ETF (FYX) – up 13.5% - Janus Henderson Small Cap Growth Alpha ETF (JSML) – up 13.4% - iShares Russell 2000 Growth ETF (IWO) – up 13% [8] Market Concerns - President Trump's announcement on September 25, 2025, regarding new tariffs on various imports starting October 1 may introduce volatility in small-cap stocks in the short term [9]

Core Insights - The biotech sector has been underperforming for several years, but recent trends indicate a potential shift in momentum as it begins to outperform broader market indices [1][2][12] - The anticipated rate cuts by the Federal Reserve are expected to positively impact biotech stocks, which are sensitive to interest rate changes [3][4][5] Performance Overview - Year-to-date, the iShares Nasdaq Biotechnology ETF (IBB) is up over 8%, while the SPDR S&P Biotech ETF (XBI) has gained only 6.2%, both trailing behind the S&P 500's 9.36% increase [1][2] - In the last month and quarter, the IBB has surged by 12.47%, indicating a potential turnaround for the sector [2] Interest Rate Impact - The biotech sector is highly rate-sensitive, relying on external funding for growth, particularly for early-stage firms facing high operational costs [4] - Lower interest rates can reduce borrowing costs and improve funding accessibility, which is crucial for biotech companies [5] Market Sentiment - Recent months have shown a resurgence in small-cap stocks alongside biotech, suggesting a broader shift in investor sentiment towards growth-sensitive sectors [6] - Easing financial conditions could enhance risk appetite and sentiment across markets, benefiting biotech investments [5] Investment Opportunities - Investors seeking exposure to the biotech sector can consider diversified ETFs like the iShares Nasdaq Biotechnology ETF, which includes major companies such as Amgen, Regeneron, and Gilead Sciences [7][8] - The IBB ETF has critical technical levels, with $140 acting as significant support and $150 as key resistance; a breakout above $150 could signal a major shift in the sector [8] Company Spotlight: Gilead Sciences - Gilead Sciences, a top holding in the IBB ETF with a 7.49% weighting, has outperformed the sector in 2025, with a year-to-date increase of nearly 28% [10][11] - Gilead's stock is consolidating near 52-week highs, and a breakout above $120 could propel further gains, potentially benefiting the entire biotech sector [11]

Group 1 - The iShares Russell 2000 ETF (IWM) experienced an inflow of approximately $385.3 million, representing a 0.6% week-over-week increase in outstanding units from 282,250,000 to 283,850,000 [1] - Among the largest components of IWM, Credo Technology Group Holding Ltd (CRDO) increased by about 1%, Fabrinet (FN) rose by about 0.6%, while EchoStar Corp (SATS) decreased by about 0.9% [1] - The 52-week range for IWM is between $171.73 and $244.98, with the last trade recorded at $239.25 [3] Group 2 - Exchange-traded funds (ETFs) operate by trading "units" instead of "shares," which can be created or destroyed based on investor demand [4] - Monitoring week-over-week changes in shares outstanding helps identify ETFs with significant inflows or outflows, impacting the underlying holdings [4]

Market Performance - All three major U.S. equity benchmarks, including the S&P 500, Nasdaq 100, and Dow Jones, reached record highs as investors favored risk assets amid expectations of falling interest rates [1][2] - The S&P 500 rose 0.8% to 6,585.53, the Nasdaq 100 increased 0.7% to 24,012.41, and the Dow Jones jumped 1.3% to 46,087.94 [2][7] - The Vanguard S&P 500 ETF increased by 0.8% to $604.49, while the SPDR Dow Jones Industrial Average rose 1.2% to $461.58 [7] Sector Performance - All 11 S&P sectors experienced gains, with consumer discretionary, materials, and financials leading the way [3] - The Consumer Discretionary Select Sector SPDR Fund outperformed, increasing by 1.3%, while the Energy Select Sector SPDR Fund lagged with a 0.1% rise [7] Company Performance - Top gainers in the S&P 500 included Synopsys, Inc. (+11.11%), Centene Corporation (+10.66%), and Micron Technology, Inc. (+9.57%) [8] - Notable losers included Delta Air Lines, Inc. (-4.30%), Oracle Corporation (-3.38%), and Netflix, Inc. (-2.83%) [9]