Small-cap stocks experienced a notable upswing as the Russell 2000 index, which monitors the performance of US small-cap stocks, surged by 2.3% on Tuesday afternoon. This positive movement comes on the heels of a 3.3% decline during Monday's trading session, where small caps lagged behind the S&P 500's significant drop.
Investors had been showing increased interest in small-cap stocks in recent weeks, as they sought opportunities in market segments that had been adversely affected by soaring interest rates. Many were speculating that the Federal Reserve would soon implement rate cuts, prompting a shift in focus towards these undervalued areas.
However, the optimism surrounding small caps took a hit following the release of the disappointing July jobs report last Friday. The report raised concerns about a potential recession and triggered a widespread sell-off in global stock markets.
