are showing signs of an earnings recession, as the Russell 2000 stocks had a year-over-year decline in earnings for the last two quarters, Nathan said.
"Even in the earlier time period, the additional return to small-cap stocks
was concentrated in companies with the highest level of default risk based on debt levels and business volatility," he said.
Trading remained range-bound with retail investors engaged in bouts of buying and selling in small-cap stocks
. As institutions remained on the sidelines, blue-chip scrips barely came up for trading.
Janney Montgomery Scott analyst Ken Trbovich attributes recent weakness in Collegium Pharmaceutical shares to three factors: insider sales following the announcement of a CEO transition; recent broader weakness in small-cap stocks
; and less confidence in its underlying business trends.
The Russell 2000 Index serves as a benchmark for small-cap stocks
and mutual funds in the U.S.
Currently, there is a slight retraction in small-cap stocks
ahead of the GE14, he said.
Fewer stocks, or more international stocks, or more small-cap stocks
than planned can all mean different risk exposures and outcomes than an investor had anticipated.
However, the speculative operations witnessed by the small-cap stocks
continued in putting pressure on the Price Index which declined for the second consecutive session.
Majid Hassan, Head of Asset Management at Mirabaud Middle East Limited, said, "Sales and earnings growth are key drivers of long-term performance for equities and they happen to be often stronger for small-cap stocks
than for larger listed companies.
The S&P 500 gained 0.30 percent in November and the S&P Composite 1500, which, like the REIT market, includes large-, mid- and small-cap stocks
, was up 0.45 percent.
Vanguard said early Tuesday that it was adding small-cap stocks
to some international equity-index funds, which will then track FTSE all-cap benchmarks.