There are three reasons why the Russell 2000 is the big winner and why that should last:
1) It's bank heavy
A big part of the Russell is banks and regional banks. The regulatory environment is going to improve markedly and we're seeing a steeper yield curve, both big tailwinds. The KRE regional bank ETF is up 8% pre-market.
2) It's domestic focused
Tariffs are problematic for multi-national companies. Their business models rely on open, frictionless markets. So while some corporate tax cuts might be coming, the spectre of tariffs and retaliatory tariffs are a problem. In contrast, many Russell 2000 companies operate in the US. Trump is likely to throw up barriers to foreign competition for them and strengthen the domestic market.
3) This looks like a breakout
The Russell will open around 2400, which gives it a shot at the 2020 high of 2458. That's a level to watch but this is looking like a breakout in one of the (only?) undervalued pockets of the US equity market.
