"Are US Small-Caps Signalling Recession?"
"Despite some strength over the past week, US equity markets are down sharply this year. Depending on which index and definition are used, some US equity markets are teetering on the edge of bear market territory (e.g. the S&P 500, which has reached a 20% pullback on intraday prices, but not yet on closing prices). Other markets, though, are firmly in bear territory. These include the tech-heavy indices (such as the Nasdaq Composite & the Philly SOX), and, in particular, the small-cap Russell 2000..
The Russell 2000 (which makes up the smallest 8% of the investable US market capitalisation), is down 29.7% from its highs in early November. Given the index represents the ‘average’ US company (rather than the globalised megacaps), many in markets are of the view that a bear market in the Russell 2000 is a clear recession signal..."