The Russell 2000 kicked off 2026 with fireworks, storming to fresh highs and stealing the spotlight from Wall Street's long-dominant tech elite, the so-called Magnificent Seven.

As of Jan. 15, the small-cap benchmark, tracked by the iShares Russell 2000 ETF (NYSE:IWM), has notched intraday record highs in each of the past 10 sessions.

During the same stretch, small caps outperformed large caps every single day, beating benchmarks tracked by the SPDR S&P 500 ETF Trust (NYSE:SPY).

To find a streak like this, investors need to go back to June 2008.

Year-to-date, the Russell 2000 is up more than 7%, sharply outpacing the S&P 500's modest 1.5% gain. Meanwhile, the Roundhill Magnificent Seven ETF (NYSE:MAGS) has gone nowhere, flat on the year.

Russell 2000 Is 2026's Early Star, Small Caps Outperform S&P 500 for Longest Streak Since 2008

Why Are Small Caps Rallying Now?

The key driver has been an improving macro backdrop. Stronger-than-expected economic data is reshaping the earnings outlook for smaller ...