Business NEWS

    News that matters

    Stock Market Rally of the Year: Is Small-Cap Investing the Way to Go?


    2023 is off to a promising start for investors, with the stock market rally of the year beginning to lose steam after a strong start to the year. The Nasdaq and S&P 500 notched their worst weekly runs in nearly 2 months, with the S&P 500 and Dow Jones Industrial Average dropping 0.9% and 0.7%, respectively.[0] Despite this, the S&P 500 is still up 8.5% for the year and the Nasdaq Composite is up 10.6%.

    This year’s stock market recovery is in keeping with a historical trend, with the S&P 500 finishing up 27.1% in the year following its two worst years since 1950 – 1975 and 2009. This trend could continue for the next 11 months and beyond, and investors who understand it could make a lot of money.

    Small-cap stocks are especially promising, with a study by Ariel Investments finding that when stocks are as cheap and battered down as they are today, small-cap stocks outperform large-caps 98% of the time.[1] And since 1930, $1,000 invested in large-cap stocks would have turned into $12 million, while the same amount invested in small-caps would have turned into $69 million.[1]

    The Fed’s position also contributes to the current investor optimism. With a strong underlying economy and labor market, the Federal Reserve is able to keep interest rates higher to tackle inflation without having to worry about a huge increase in unemployment.[2] Fed Chair Jerome Powell said Tuesday that more rate hikes are needed amid the strong labor market.[3]

    Since March 2022, the Federal Reserve has increased the federal funds rate to 4.50% from its near-zero levels by increasing interest rates by a total of eight times.[4] Officials from the Federal Reserve have been consistently stating that interest rates will increase, potentially reaching a level of 5% or higher.[5]

    Benzinga is tracking a handful of small-cap and micro-cap opportunities, including Sensate, a self-care startup that’s grown revenue by 363% in a year even as larger-cap companies floundered.[1] If you would like to find out more about Sensate and their groundbreaking infrasonic therapy, please click here.[1]

    Since mid-2022, the Federal Reserve's aggressive interest-rate campaign has led to a moderation of inflation.[0] This has caused some investors to be hopeful that the Federal Reserve of the United States could either halt their rate increases or even start lowering them this year.[2]

    0. “The stock market rally of 2023 is losing steam – the Nasdaq and S&P 500 just notched their worst weekly runs in nearly …” Business Insider Africa, 13 Feb. 2023,

    1. “Why History Says 2023 Will Be A Banner Year For Stocks By Benzinga” UK, 8 Feb. 2023,

    2. “The Stock Market Is Rallying. Will It Last?” Money, 8 Feb. 2023,

    3. “The Stock Market Is Off To A Great Start In 2023 — Here's How The Federal Reserve, Interest Rates May Cha” Benzinga, 9 Feb. 2023,

    4. “3 Stock Strategists and 3 Scenarios for the Stock Market in 2023” Morningstar, 9 Feb. 2023,

    5. “As stocks rally in 2023, investors can't stop thinking about 2021” AOL, 4 Feb. 2023,

    Leave a Comment

    This div height required for enabling the sticky sidebar