New research from global index provider FTSE Russell reveals that the US equity market rally since election day, commonly referred to as the “Trump Bump,” reflected a change in market leadership to coincide with the country’s change in leadership.
After the US election on November 8 through the US presidential inauguration on January 20, US small caps led the market rally, as measured by a nearly 14% index return for the US small cap Russell 2000® Index compared to a 7.3% index return for the US large cap Russell 1000® Index. And, across US large- and small cap stocks, value showed higher index returns during this time period according to the Russell 1000 and 2000 Value and Growth Indexes.
Since the US presidential inauguration on January 20 through March 10, the Russell indexes demonstrated that US large cap stocks have taken the reins, with the Russell 1000 returning 4.9% relative to a 1.6% return for the Russell 2000. And, across US cap tiers, growth-oriented stocks have shown higher returns than value-oriented stocks during this time period according to the Russell 1000 and 2000 Value and Growth Indexes.
Tom Goodwin, senior index research director, FTSE Russell, said:
“We saw quite a run for small cap US stocks beginning with the US election as an apparent reaction to political rhetoric around ‘America first’ and protectionism, often perceived as favorable to small caps. By the time of the inauguration, however, the dialogue had shifted to potential deregulation and tax breaks, viewed as favorable policies for US large caps. And sector performance has helped drive higher returns for growth indexes so far in 2017. Technology, the largest sector in the Russell 1000 Growth Index, has risen 10.9% year-to-date, while Healthcare, the largest sector in the Russell 2000 Growth Index, has risen 11.6% year-to-date.”
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