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Beyond the Megacaps: How Valuation, AI Rotation, and Russell Reconstitution Shaped a Smallcap Rally
114 Views14 Jul 2026 21:18
SUMMARY
- Small-Cap valuations were historically depressed, with the Russell 2000 trading at a 26% EV/EBIT discount versus the S&P 500, fueling the recovery.
- Russell 2000 outperformance reflected stronger risk appetite, with its high-beta Dynamic segment returning 61.2% versus 28.0% for Defensive stocks.
- The Russell 2000 rally stalled after the 26 June FTSE Russell reconstitution graduated 42 stocks to the Russell 1000, including top performers like Bloom Energy.
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- Beyond the Megacaps: How Valuation, AI Rotation, and Russell Reconstitution Shaped a Smallcap Rally14 Jul 2026
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