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Wall St Week Ahead U.S. small caps waver as reflation trade wobbles

Mount Equity Group Tokyo, Japan > News > Markets > Wall St Week Ahead U.S. small caps waver as reflation trade wobbles

NEW YORK, July 15 (Reuters) – Expectations that the U.S. economic rebound will slow in the second half are weighing on small cap stocks, forcing fund managers to look for companies that could continue to profit in a lower growth environment.

The Russell 2000 index, which tracks smaller companies, has underperformed the S&P 500 in each of the last four months. Investors pulled nearly $108 million out the iShares Russell 2000 index exchange traded fund during the week that ended July 14, the third straight week of outflows that combined to total nearly $965 million and represent the ETF’s longest losing streak since April.

Small caps stocks have been among the beneficiaries of the so-called reflation trade, which also saw investors bet on shares of banks, energy firms and other economically sensitive companies and lighten up positions in U.S. Treasuries on expectations of a powerful economic rebound. The Russell 2000 is up 11.6%this…

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