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Small-Cap Stocks Post Best First Half in 35 Years, Snapping a Long Streak of Underperformance

7/5/2026

Small-cap stocks logged their best first-half performance in 35 years, capping a stretch that stood in stark contrast to the sector's recent history of lagging large-cap peers.

The advance marks a meaningful shift in the equity landscape after an extended period in which smaller companies struggled to keep pace with their larger counterparts.

A Sharp Break From Recent Trend The gain represents more than a single strong quarter.

Small-caps had spent years on the losing end of the large-cap comparison, a period during which concentrated mega-cap leadership dominated benchmark returns and drew the bulk of institutional flows.

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