In 2024, the share prices of large-cap companies have soared while small-caps have struggled. Thursday's price action could mark a key reversal in this year's trend.

Price Action: The iShares Russell 2000 ETF (IWM  ), which tracks small-cap stocks, closed up 3.63% on the day. The iShares Russell 1000 ETF (IWB  ), which tracks large-cap stocks, was down 0.66% on the day.

The difference between the two indexes' performances was therefore over 4%.

The Roundhill Magnificent Seven ETF (MAGS  ), which tracks Microsoft Corp (MSFT  ), Apple Inc (AAPL  ), NVIDIA Corp (NVDA  ), Alphabet Inc (GOOG  ) (GOOGL  ), Meta Platforms Inc (META  ), Amazon.com Inc (AMZN  ) and Tesla Inc (TSLA  ), saw a big down day. The share prices of the Magnificent Seven collectively fell 4.49%.

Why it Matters: According to a post on X by strategist Ed Clissold, the Russell 2000 posted one of its best days ever compared to the Russell 1000 on Thursday. A difference between the two indexes of over 4% has only occurred on four occasions:

  • On Oct. 19, 1987, "Black Monday."
  • On Oct. 10, 2008, during the Great Recession.
  • On Oct. 4, 2011, following a market low during the European debt crisis.
  • And on March 19, 2020, near the bottom of a pandemic-driven low.
All of the dates mentioned above occurred during periods of decline; the latest addition to the list is an outlier, as the S&P 500 index is near an all-time high. Alternatively, Thursday's results could suggest outcomes similar to historical performance following 4% days.

Small caps seemingly benefited from Thursday's cooler-than-expected June consumer inflation report, which could play a part in preempting interest rate cuts later this year. The higher-for-longer interest rate environment benefitted large-cap companies with extensive cash piles and hurt smaller businesses reliant on debt.