QQQS ETF

Biotechnology stocks and related ETFs, which were once strong performers in healthcare investing, have been underperforming since 2021. This long period of poor results has made some investors hesitant to invest in this area.

Small-cap stocks and the related exchange traded funds have moved in fits and starts this year. However, some market observers believe that with a recession unlikely, the asset class could be poised for a period of smoother upside.

For much of the first half of 2024, conversation saw a small number of stocks representing significant portions of the market's upside. In other words, market breadth was narrow and largely concentrated within a few mega-cap growth stocks.

Small-cap stocks and related ETFs have spent considerable time tantalizing and tormenting investors. So it's understandable market participants may be leery of the asset class.

Small-caps and the related ETFs continue vexing market participants. However, credible reasons remain as to why investors shouldn't be dismissive of this corner of the market.

Waiting on small-cap stocks and related ETFs to rally in earnest has, for many market participants, become an exercise in futility. Some encouraging news for smaller equities may have arrived last week in the form of the May reading of the Consumer Price Index (CPI).

After a period of both exciting and disappointing investors, small-cap stocks seem to be gaining stability. The Russell 2000 Index has increased by 7.74% for the month ending May 16, suggesting that smaller stocks may be poised for significant gains.

Biotech stocks and the corresponding exchange traded fund have been disappointing investors for a long time. With the NASDAQ Biotechnology Index down for the year, some investors may choose to avoid this sector.

Could a recovery be coming soon? The Russell 2000 Index, a popular indicator of small-cap stocks, has increased by 2.82% so far this year. However, this growth is significantly lower than the 9.26% increase seen in the S&P 500.