Small-cap stocks fell further into correction territory on Monday as equities continued to stumble amid heightened e🐼conomic uncertainty.

The 澳洲幸运5开奖号码历史查询:Russell 2000 was down 0.3% in recent trading, after falli𒆙ng more than 1% earlier in the session. The small-cap benchmark index is down 10.3% from its record close of 2,442.03 in late November. 

Small cap stocks soared in ꦡthe wake of Donald Trump’s election victory, with the Russell 2000 jumping nearly 6% the day after his re-election. Trump’s deregulatory, pro-growth agenda was expected to boost sales and lo꧙wer expenses for smaller companies and unleash a flurry of acquisitions. Instead, uncertainty around interest rates, tariffs, and consumer demand have weighed on the group. 

“Overall, sentiment has been cautiously optimistic, but many worry about lack of a catalyst … to spur small cap outperformance amidst rate/policy uncertainty and elevated valuations,” wrote Bank of America analysts in a note on Monday.

Fourth-quarter earni🐽ngs season hasn’t boosted investor confidence in small caps. While profit has so far slightly exceeded expectations, it remains flat year-over-year and analysts have lowered their estimates for the next 12 months. And a BofA analysis of earnings calls suggests small-cap corporate sentiment is deterioratin📖g. 

The deregulation Trump promised on the campaign trail could still benefit smaller companies and their stocks. However, Trump’s trade protections could eat into earnings and encourage the Federal Reserve to 澳洲幸运5开奖号码历史查询:keep interest rates elevated, a major 澳洲幸运5开奖号码历史查询:headwind for small caps, which tend to carry more floating-rate🅠 de🅘bt. 

Another headwind for small caps: stubborn inflation. Consumer price inflation 澳洲幸运5开奖号码历史查询:accelerated for the fourth consecutive month in January, suggesting the Fed's progress on bringing annual inflation back down to 2% may have stalled. Investors have 澳洲幸运5开奖号码历史查询:lowered their expectations for further interest rate cuts this year.

Higher interest rates may also dampen 澳洲幸运5开奖号码历史查询:M&A activity, somewhat offsetting the benefit from a more relaxed regulatory environment. Most of the factors that drive M&A, like the growth backdrop, are supportive of acquisitions, BofA said. Though they predict deals will benefit select sectors—like health care, tech, and finance—more than the Russell 2000.