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The Russell 2000 is set for its strongest session in a month, bolstered by renewed confidence in the U.S. economy’s resilience after recession fears rattled markets earlier this month.
The iShares Russell 2000 ETF (NYSE:IWM) was up 2.8% Thursday afternoon, battling for its best one-day session since July 16, when it rallied 3.4%. The small-cap index outperformed the larger-cap indices, highlighting its heightened sensitivity to economic data.
The optimism surrounding the Russell 2000 was bolstered by the release of robust economic data on Thursday. Retail sales for July 2024 exceeded expectations, while initial jobless claims for the previous week came in lower than anticipated, countering recession fears.
Retail sales jumped 1% month-over-month in July, marking a sharp rebound from the downwardly revised 0.2% decline in June. This increase far surpassed the expected 0.3% gain and marked the most significant rise since January 2023. The surge was led by a 3.6% increase in sales at motor vehicle and parts dealers, followed by a 1.6% rise in sales at electronics and appliance stores.
On the labor market front, initial jobless claims fell from 234,000 to 227,000 for the week ending Aug. 10, defying market expectations of an increase to 235,000. This marks the second consecutive weekly decline since jobless claims reached a near-one-year high of 250,000 in late July.
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“The July retail sales data were consistent with our soft-landing economic outlook,” said Aditya Bhave, Bank of America economist.
Bhave highlighted that the retail sales control group, which represents over a quarter of total personal consumption expenditures (PCE) and more than 80% of goods spending, has seen annualized increases of 6.8% and 4.4% over the past three and six months, respectively.
“With inflation cooling off, retail spending is still clearly running above trend. The decline in jobless claims reported today supports our view that a still-solid labor market is propping up consumer spending,” Bhave added.
In response to Thursday’s economic data, traders adjusted their expectations for future Federal Reserve rate cuts. The probability of a 25-basis-point rate cut has now increased to 77%, up from 64% just a day earlier and 45% a week ago.
David Morrison, senior market analyst at Trade Nation, stated, “It appears that the issues caused by the unwinding of the yen carry-trade, the frothiness of the tech sector, and U.S. recession fears have now dissipated. Investors are in a much better mood than they were 10 days ago, although a period of consolidation may be required to fully digest recent gains.”
The top five performers within the Russell 2000 index on Thursday were:
| Name | % (1-day) |
| AST SpaceMobile, Inc. (NASDAQ:ASTS) | 40.89 |
| Accuray Incorporated (NASDAQ:ARAY) | 33.43 |
| Gambling.com Group Limited (NASDAQ:GAMB) | 26.22 |
| Perpetua Resources Corp. (NASDAQ:PPTA) | 24.24 |
| Telos Corporation (NASDAQ:TLS) | 24.15 |
Conversely, the top five losers were:
| Name | % (1-day) |
| Terran Orbital Corporation (NYSE:LLAP) | -41.26% |
| SIGA Technologies, Inc. (NASDAQ:SIGA) | -34.15 |
| Spire Global, Inc. (NYSE:SPIR) | -30.05 |
| B. Riley Financial, Inc. (NASDAQ:RILY) | -26.53 |
| Titan Machinery Inc. (NASDAQ:TITN) | -10.16 |
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Posted In: ARAY ASTS GAMB IWM LLAP PPTA RILY SIGA SPIR TITN TLS
