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Why Small Caps Are "Shining"

Published: Monday, 11 Aug 2008 | 12:56 PM ET
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By: Bob Pisani
Reporter

This post is from CNBC producer Robert Hum.

Many of the trends seen last week continue at the midway point of today’s trading session.

Stocks have moved to their highs of the day as the dollar rally/commodity drop continues. Airlines and consumer discretionary stocks lead the way, benefiting from oil falling over $2, to under $113.

On the flip side, the declining commodity prices are moving energy and material stocks sharply lower. Gold stocks headline this weakness, posting a 6 percent decline today. In fact, they have now been down three days in a row, posting a 12% decline during that time.

Once again, the small cap Russell 2000 index is shining. Its 2 percent gain is outperforming the 1 percent gains that the other major indices are seeing. Recall that the dollar strength generally hurts the larger U.S. multinational companies more as their exports become more expensive overseas. With a more U.S.-centric focus, the small cap companies listed on the Russell 2000, however, typically don’t have this international exposure and are less affected by a rally in the dollar.


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