Small caps are quietly outperforming the S&P 500 and 'Magnificent 7' this year: AlphaCheck Grace O'Donnell Editor, Special Projects Thu, August 6, 2026 at 7:39 AM PDT 3 min read ^RUT ^GSPC COP ^IXIC CL=F Good morning. Stocks were little changed on Thursday morning in the wait for a Middle East deal, though a decline in software stocks dragged on the Nasdaq Composite ( ^IXIC ) in the first half-hour of trading. Oil prices ( CL=F , BZ=F ) are up, and so is SpaceX ( SPCX ) stock as retail investors buy the dip . But first, a check of the markets in early trading, as of 10:20 a.m. ET, based on a heat map powered by Yahoo Finance AlphaSpace data . The tech sector ( XLK ) was under pressure in early trading but flipped into the green. The iShares Expanded Tech-Software Sector ETF ( IGV ) fell over 2%, offset by a 2% gain in the iShares Semiconductor ETF ( SOXX ). Energy stocks ( XLE ) also rose, mirroring a 1% rise in oil and a lift in ConocoPhillips ( COP ) shares after the company reported earnings. More from Yahoo Scout What risks could derail the small-cap outperformance trade? What factors could sustain small-cap market leadership? How do small-cap valuations compare to large-caps? Why are small caps quietly outperforming larger stocks? Here are the top stocks Yahoo Finance readers viewed this morning: SpaceX ( SPCX ), Micron ( MU ), Intel ( INTC ), SK Hynix ( SKHY ), Oracle ( ORCL ), IBM ( IBM ), and CrowdStrike ( CRWD ). 1 trend we're watching: Small caps are quietly outperforming. Will it last? While the S&P 500 ( ^GSPC ) and Dow Jones Industrial Average ( ^DJI ) reached record highs this week, another group of stocks in an overlooked part of the market also quietly showed its strength. The Russell 2000 ( ^RUT ) index touched a record high on Wednesday, surpassing the 3,000 level for the first time. The small-cap index's 20.7% return has outperformed the S&P 500's 12.8% gain this year, and it has also outperformed the "Magnificent Seven" stocks year to date, as small caps benefited from profit-taking in the larger, growthier parts of the market. As concerns swirl about a top-heavy market dominated by AI-related names, small caps may be seen as an attractive entry point for exposure to the AI boom, as the iShares Russell 2000 ETF ( IWM ) has a price-to-earnings multiple of 18x, compared to the SPDR S&P 500 ETF's ( SPY ) 27x, according to AlphaSpace data. In a note last week, RBC Capital Markets' Lori Calvasina laid out the case for small-cap leadership to grind higher: below-average valuations, a stronger bottom-up earnings growth outlook, and several economic tailwinds, such as a reacceleration in job growth and manufacturing activity. Still, there are plenty of risks, and Calvasina noted it wouldn't be surprising to see small caps take a pause. The trade has been choppy,...
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