For most of its history, the Russell 2000 index has been driven by a single industry: regional banks.

When the economy did well, regional banks prospered and small-caps followed. When a recession unfolded, they were the first collateral damage.

Something different is unfolding now.

Regional banks, tracked by the SPDR S&P Regional Banking ETF (NYSE:KRE), are still stuck well below their 2022 peak while the broader small-cap index runs to new record highs without them.

Two lines that usually move together have split apart, as the chart below shows.

If regional banks did not drive this rally, something else did.

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Where Russell 2000 Gains Are Actually Coming From

The iShares Russell 2000 ETF (NYSE:IWM) has gained 18% year-to-date through May 27, but the drivers of the rally look very different from those in prior small-cap cycles.

Performance attribution data from Koyfin show that technology and industrial stocks have done almost all the heavy lifting.

Information technology, which represents 18.3% of the Russell 2000, has surged 43% in 2026, contributing ...