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Robust quarterly results and steady consumer demand reinforce long-term confidence in small-cap growth.
July ended with a busy week of corporate earnings, economic releases, and a Federal Reserve policy decision. Investors were forced to evaluate cooling inflation metrics alongside steady economic growth data while navigating a rotation between technology and cyclical sectors.
Small-Caps vs. the Broader Market
Small-cap equities maintained strong relative performance against broader market benchmarks through the end of July. The S&P SmallCap 600 index recorded a gain of 6.04% for the month of July, outpacing broader market benchmarks as capital continued to flow into domestic, valuation-discounted equities.
For the year to date, the S&P SmallCap 600 Index advanced 13.4% YTD, continuing its multi-month momentum relative to large-caps. Over the past 52 weeks, the S&P SmallCap 600 logged an impressive 30.1% gain, supported by earnings growth acceleration and reshoring trends across domestic small-cap constituents.
Macroeconomic Indicators and Fed News
In headline economic news, the Federal Open Market Committee voted 9–3 to maintain the target range for the federal funds rate at 3.50% to 3.75%. Three members dissented in favor of a 25-basis-point increase. In his press conference, Fed Chair Kevin Warsh noted the economy’s "impressive resilience," highlighted strong business investment, and reiterated the central bank's singular 2% inflation objective.
The June Personal Consumption Expenditures (PCE) price index showed headline inflation easing 0.1% month-over-month, while core PCE rose 0.2%. Second-quarter U.S. GDP expanded at an annualized rate of 2.1%, signaling continued consumer spending resilience.
Market Movers and Sector Performance
Corporate earnings reports drove significant volatility across sectors for many individual stocks.
Nebius Group surged 27.13% ahead of Q2 earnings, and Bloom Energy jumped 26.49% after exceeding earnings expectations and raising full-year 2026 guidance. Sandisk rose 25.99%. MarketAxess Holdings (MKTX) gained 38.5% after the announcement that Intercontinental Exchange (ICE) would be acquiring the company.
On the downside, Alnylam Pharmaceuticals fell 28.31% following lower 2026 revenue guidance, Fair Isaac dropped 17.01% on mixed Q3 results, and Tradeweb Markets declined 9.60%.
Near-Term and Long-Term Investor Outlook
Current market conditions provide rather clear indications of investor positioning. Many eyes are focused on Q2 earnings execution, verifying whether cooling PCE inflation will allow the Fed to keep rate conditions steady, and tracking incoming ISM manufacturing PMI data.
Longer term, the question remains whether earnings expansion will continue beyond mega-cap tech. The durability of corporate capital expenditures is also still up in the air.
The shift toward fundamentally sound cyclical, industrial, and small-cap equities still has legs, and while there are no guarantees, the runup could last for some time.
In the SmallCap Informer
The biggest movers of the week from our SmallCap Informer coverage list were:
The laggards of the week continued to be led by semiconductor companies:
Our August 2026 issue was published yesterday and introduced a small medical equipment manufacturer to our coverage list. Coincidentally, the stock is already up 3.89% today, which is always nice to see.
Stay the course!
— DOUG GERLACH, EDITOR-IN-CHIEF
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