Small caps are on a historic winning streak:

The Russell 2000 has outperformed the S&P 500 for 10 consecutive sessions, the longest run since 1990.

Over this period, small caps have rallied +7.5%, while large caps have gained +1.3%.

As a result, the ratio of the Russell 2000 to the S&P 500 has surged +6.7%, to 0.39, the highest since December 2024.

This comes despite 2-year Treasury yields rising for 9 straight days, as investors are pricing in fewer Fed rate cuts in 2026.

Historically, small caps underperform large caps when yields rise, as they rely more heavily on debt financing.

That said, despite this shift, the ratio remains -35% below the 2021 peak.

Investors are rotating back into small caps.