J.P. Morgan: Small-cap stocks in the United States are expected to outperform large-cap stocks for the first time in eight years

On December 11th, Jin10 Data reported that Steven DeSanctis, small-cap strategist at Jefferies, said that the performance of U.S. small-cap stocks will exceed that of large-cap stocks for the first time in eight years. Small-cap companies with a market capitalization between $250 million and $2 billion are attractive to investors because they have greater potential for rise than large-cap stocks, but their performance has been at an “extreme level” compared to large-cap stocks over the past decade. In fact, poor performance over the past eight years has led to the “longest continuous decline in this asset class ever.” Small-cap stocks currently account for less than 4% of the entire U.S. stock market, the lowest level since the 1930s. However, several factors will continue to transform this trend in 2025, including strong earnings growth prospects, attractive valuations relative to large-cap stocks, and a loose interest rate environment. The Russell 2000 index is expected to pump 13.5% and reach a historic high of 2715 by the end of 2025.