During Rate Cut Cycle, Russell 2000 May Not Outperform S&P 500

– Duration: January 2001 to June 2003

– Rate Reduction: From 6.5% to 1.0%

– Reasons for Rate Cut: 1) Burst of the Internet bubble. 2) Impact of the 9/11 attacks.

– Duration: September 2007 to December 2008

– Rate Reduction: From 5.25% to 0.25%

– Reasons for Rate Cut: 1) Subprime mortgage crisis. 2) Collapse of Lehman Brothers shook financial markets.

– Russell 2000 vs. S&P 500: Even performance.

– Duration: December 2018 to March 2020

– Rate Reduction: From 2.50% to 0.25%

– Reasons for Rate Cut: 1) Global economic slowdown. 2) Escalating trade tensions. 3) Inflation rate below target levels.

In the absence of an economic crisis or a tech bubble, the performance of the S&P 500 index during rate cut cycles may still outperform the Russell 2000 index.