Cantor Fitzgerald is optimistic about the Russell 2000 Index and predicts that Trump's victory will benefit small-cap stocks

The Zhitong Finance App learned that the US financial services company Cantor Fitzgerald is optimistic about the Russell 2000 Index because it believes that the possibility of Republican presidential candidate Trump winning the November US presidential election is higher than market expectations, and Trump's return to the White House will benefit small-cap stocks.

According to a poll released on Tuesday, competition between Democratic presidential candidate Harris and Trump is becoming more intense, and both candidates have 48% approval ratings among voters. And last month's poll showed that Harris was 5 percentage points ahead of Trump with an approval rating of 49% to 44%.

Cantor Fitzgerald pointed out that small-cap stocks usually perform well when the general election is approaching, and as pro-Trump polls gradually heat up, the market is also beginning to look forward to it. Eric Johnston, the company's chief strategist, said that the Russell 2000 Index has always been a “major laggard,” but now is a good time to “go to the bottom.” He mentioned that judging from historical data, Russell 2000 fluctuated very clearly before and after the general election. In the past 11 election years, the increase was more than 6.5% in 4 years, and it was able to soar by 12% or more before the end of the year.

Of course, Eric Johnston also acknowledged that every election year has its own drama, but data shows that the potential for the Russell 2000 Index to rebound before and after the election should not be underestimated. He optimistically predicted that if Trump continues to lead, small-cap stocks will usher in a wave of “spring.” In the absence of swing states, Trump had 302 electoral votes, while Democratic candidate Harris had 236, according to RealClearPolitics.

Cantor Fitzgerald said that if Trump wins the election, it is expected to benefit US domestic companies for reasons including: lower tax rates; similar to or more than current spending; less financial and overall small business regulation; more certainty in general, which encourages more risky behavior in the stock market and economy; and increased consumer confidence.

Cantor Fitzgerald added that the iShares Russell 2000 ETF (IWM) will be part of a broader deal, and capital will leave large stocks/long-term growth stocks and move into stocks with various characteristics. The company sees inflation-leveraged assets, including bitcoin and gold, as beneficiaries of Trump's election victory.