As geopolitical tensions in Iran and stagflation fears drag broader U.S. markets into the red, small-cap stocks are showing surprising resilience, leaving market experts sharply divided on what comes next.
A Striking Market Divergence
Despite the specter of war and rising crude oil prices, the iShares Russell 2000 ETF (NYSE:IWM) has managed to stay in the green, posting a 1.31% year-to-date gain.
In stark contrast, the broader markets have stumbled out of the gate in 2026. The S&P 500 index has declined 4.02% YTD, the Nasdaq Composite is down 5.84%, and the Dow Jones has tumbled 3.88%. The overall data reflects a market leaning on the domestic strength of small-cap equities to weather the geopolitical storm.
The Bull Case: A ‘Massive Surge’
Louis Navellier, founder and chief investment officer of Navellier & Associates, believes the macroeconomic shockwaves are actually a catalyst for small-cap outperformance.
“The Iran war is setting the stock market up for a massive surge, since the uncertainty in the world is being eliminated,” Navellier explained. He noted …
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