Small caps outshine tech elite in 2026; Russell 2000 hits record highs, up 7% YTD. Small caps beat S&P for 10 days.

In 2026, the Russell 2000 index started the year strong by reaching new highs, overshadowing the tech giants on Wall Street. The small-cap benchmark, monitored through the iShares Russell 2000 ETF (NYSE: IWM), has achieved record highs during the last 10 trading sessions as of Jan. 15. Throughout this period, small-cap stocks have outperformed large caps consistently, surpassing the benchmarks of the SPDR S&P 500 ETF Trust (NYSE: SPY). This unbroken streak is reminiscent of June 2008. Year-to-date, the Russell 2000 has surged over 7%, significantly surpassing the S&P 500's meager 1.5% growth. On the contrary, the Roundhill Magnificent Seven ETF (NYSE: MAGS) has seen no growth, remaining flat for the year. Small caps have stolen the spotlight in early 2026 by outperforming the S&P 500 for the longest stretch since 2008. The driving force behind this rally has been the improving macroeconomic conditions, leading to a more positive earnings outlook for smaller companies.