US small caps waver as reflation trade wobbles

The Russell 2000 index, which tracks smaller companies, has underperformed the S&P 500 in each of the last four months.

NEW YORK: Expectations that the U.S. economic rebound will slow in the second half are weighing on small cap stocks, forcing fund managers to look for companies that could continue to profit in a lower growth environment.

The Russell 2000 index, which tracks smaller companies, has underperformed the S&P 500 in each of the last four months. Investors pulled nearly $108 million out the iShares Russell 2000 index exchange traded fund during the week that ended July 14, the third straight week of outflows that combined to total nearly $965 million and represent the ETF’s longest losing streak since April.