The Russell 2000 index, which tracks 2,000 small-cap stocks in U.S. markets, is predicted to reach new highs amid signs of economic resilience, particularly in the labor market. As of early April, weekly initial claims for unemployment benefits are trending near 200,000, indicating strong labor conditions.
Exchange-traded funds (ETFs) linked to the Russell 2000, such as the iShares Russell 2000 ETF (IWM) and the Vanguard Russell 2000 ETF (VTWO), are benefiting from these positive trends. IWM boasts a higher liquidity with an average daily volume of 44 million shares, while VTWO offers a lower expense ratio at 0.07% compared to IWM’s 0.19%.
Forecasts for Q1 2023 suggest a potential 45% year-over-year earnings growth for Russell 2000 companies, driven by favorable borrowing conditions. The index’s potential to test all-time highs is heightened as macroeconomic factors evolve, although the trajectory could be impacted by fluctuations in interest rates influenced by global events.
