Small-cap stocks, as measured by the Russell 2000 index, leaped 20.7% in the second quarter, ending a losing streak from the past three quarters.
That's an encouraging sign for investors, as small-cap stocks often are leaders coming out of a market downturn and their resurgence might be signaling a market recovery.
Technology led the way (31%), followed by consumer discretionary (30.1%), energy (28.1%) and materials and processing (27%). Thanks to the solid quarterly results, the Russell 2000 was up 2.6% through the first half of this year.
Nonetheless, the index was down 25% for the one-year period and down nearly 10% for the three-year period.
Steve Wood, Russell's chief market strategist for North America, said the disparity in first-half returns favoring growth stocks over value stocks widened during the second quarter to 14.3% among large caps and 16.5% among small caps.