It was a mixed week on Wall Street, with large-cap indexes largely rangebound while the rally broadened to small-cap stocks. The Russell 2000 index not only hit fresh record highs but also posted its longest streak of consecutive outperformance versus the S&P 500 since 2008.

Small-Cap Strength Meets Economic Reacceleration

The foundation of this outperformance was better-than-expected macroeconomic data.

The U.S. economy is now projected to grow at a stunning 5.3% annualized rate in the final quarter of 2025, according to the Atlanta Fed's GDPNow model. Initial jobless claims came in at 198,000 last week, below expectations and the second-lowest level in two years, pushing back fears of a cooling labor market.

Analysts see the surprising reacceleration of the U.S. economy as fresh fuel for small- and mid-cap earnings, prompting upward revisions to profit estimates.

Earnings season ...