The Russell 2000 index (RUT) of small-cap stocks has finally hit a new record high.
Claim 50% Off TipRanks Premium and Invest with Confidence
- Unlock hedge-fund level data and powerful investing tools designed to help you make smarter, sharper decisions
- Stay ahead of the market with the latest news and analysis so your portfolio is always positioned for maximum potential
For the first time in four years, the Russell 2000 index of small-cap stocks has closed at an all-time high. Small-cap stocks are generally defined as securities with a market capitalization of less than $10 billion and include names such as The Gap (GAP), e.l.f. Beauty (ELF), and Oppenheimer Holdings (OPY).
The Russell 2000 index closed on Sept. 18 at a record high of 2,467.70, which was a day after the U.S. Federal Reserve lowered interest rates for the first time this year. It was the first record close since November 2021, which occurred at the peak of the Covid-19 rally.
Rate Cut Boost
Analysts say investors are piling into small-cap stocks after the U.S. Federal Reserve signaled that two more rate cuts are likely by year’s end. Small-cap stocks are sensitive to changes in interest rates as they tend to borrow money to fund their operations.
Small-cap stocks have outperformed large-caps over the past two months, with the Russell 2000 index up 13.5% since Aug. 1. That compares to a 7% gain in the benchmark S&P 500 index (SPY) and a 10% rise for the technology-heavy Nasdaq (NDAQ) over the same period.
Is GAP Stock a Buy?
The Gap’s stock has a consensus Moderate Buy rating among 14 Wall Street analysts. That rating is based on six Buy and eight Hold recommendations issued in the last three months. The average GAP price target of $24.71 implies 11.01% upside from current levels.
