The Dow Notches a Strong September

Small-cap stocks scored an impressive gain last week, with the Russell 2000 Index climbing 2.76% to a record high, amid a strong overall showing for equities.

The Standard & Poor’s 500 index and Nasdaq Composite Index reached new peaks, as well. The Dow Jones Industrial Average, up 0.25% on the week, missed out on setting a new record. But like other stock indexes, it enjoyed a strong September—a month when large-cap stocks have often struggled—and third quarter, gaining nearly 5% over the three months. The S&P 500 rose 0.68% last week, and the Nasdaq Composite was up 1.07%, regaining its footing after a poor start. The Nasdaq Composite is up 20.7% this year.

The Dow finished the month up 2.08%. Over the past century, the index has averaged a 1.09% loss in September, the worst-performing month. Many analysts attributed the market’s recent gains to two factors:  growth is picking up again, and an increasing optimism that some kind of a tax-reform package will get passed in Washington in the near future.

That certainly has helped small-cap names, many of which typically have higher tax rates than bigger firms do. Small caps were also helped by a stronger greenback, as they don’t have the multinational exposure of many larger firms. The Russell 2000 appreciated 6.09% in September.

Laurence C. Strauss, Barron’s, September 30, 2017.

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