Russell 2000 Today: Small‑Cap Index Holds Near Record Highs As Fed Rate Cut Looms (December 10, 2025)

The Russell 2000 index of U.S. small‑cap stocks is quietly sitting within touching distance of all‑time highs as traders wait for the Federal Reserve’s final interest‑rate decision of the year.

On Wednesday, December 10, 2025, the Russell 2000 closed around 2,526.5, essentially flat on the day but just a fraction below its record zone. Intraday, the index has been trading in the 2,520–2,530 range, consolidating after notching a new intraday record high on Tuesday. ^[1]

Over the past few months, small caps have gone from market laggards to leaders. The Russell 2000’s total return is up about 14.7% year‑to‑date, with a gain of 18.6% over the last six months and around 7% over the past year, according to YCharts data as of December 9–10, 2025. ^[2]

At the same time, expectations for a third consecutive Fed rate cut and a broader economic re‑acceleration have fueled a wave of bullish forecasts — tempered by warnings that rising bond yields and higher financing costs could bite into small‑cap profits in 2026. ^[3]

Key takeaways on the Russell 2000 today

Price action: The Russell 2000 ended December 10 near 2,526.5, up roughly 0.01% from Tuesday’s close of 2,526.24, and less than 0.2% below its all‑time record closing high around 2,531.15 set last week. ^[4]
Recent leadership: On Tuesday, the index gained about 0.21%, leading major U.S. benchmarks and setting a new intraday record, even though it stopped just short of a record close. ^[5]
YTD performance: Including dividends, the Russell 2000 total‑return index is up ~14.7% in 2025, after double‑digit gains in 2023 and 2024, but following a steep drop in 2022. ^[6]
Macro driver: Markets see about an 85–90% chance of a quarter‑point Fed cut today, bringing the funds rate down to roughly 3.5–3.75%, with small caps historically outperforming when rates are falling. ^[7]
Earnings outlook: FactSet data cited by Barron’s show Russell 2000 earnings are expected to grow ~35% annually over the next two years, more than double the roughly 14% annual growth forecast for the S&P 500. ^[8]
Risk flags: MarketWatch and other strategists warn that rising Treasury yields and higher financing costs could become a serious headwind for highly leveraged small‑cap companies in 2026. ^[9]

Russell 2000 today: price action and “almost” record territory

Fresh historical data show that on December 10, 2025 the Russell 2000: ^[10]

Opened: ~2,517.9
Intraday high: ~2,528.9
Intraday low: ~2,516.3
Closed: ~2,526.5
Daily move: roughly +0.01%

This comes one day after the index traded at a new intraday record and closed at 2,526.24, about 0.21% higher on the day and roughly 4 points below its all‑time record closing level around 2,531.15, according to TradingView’s recap of Tuesday’s session. ^[11]

In a morning note published at 6:51 a.m. on December 10, broker XTB described Tuesday’s American session as “mixed”: the Dow fell about 0.3%, the S&P 500 slipped 0.09%, the Nasdaq gained 0.13%, and the Russell 2000 was the best performer, up 0.21% and hitting a fresh intraday record, though it still fell short of a new all‑time closing high. ^[12]

Taken together, this paints a picture of a small‑cap benchmark that is leading the tape but pausing at resistance, as traders wait to see whether the Fed’s next move will justify pushing the index into genuinely new territory.

How 2025 has reshaped the small‑cap story

From laggard to leader

The last two years have been a roller coaster for small caps:

After a sharp –20.4% total‑return loss in 2022, the Russell 2000 bounced +16.9% in 2023 and +11.5% in 2024, according to YCharts. ^[13]
As of December 10, 2025, the index is showing a +14.7% total return year‑to‑date, with 6‑month gains near 18.6% and a 1‑year return of ~7.0%. ^[14]

Franklin Templeton’s Royce Investment Partners team highlighted how dramatic the turnaround has been. In the third quarter of 2025, the Russell 2000 rose 12.4%, handily beating the 8.0% gain in the large‑cap Russell 1000. From the April 8, 2025 low through September 30, the small‑cap index surged nearly 40%, outpacing large caps and even more so micro‑caps. ^[15]

Despite this run, small caps remain under‑owned and relatively cheap by some measures:

The Russell 2000’s weight in the broader Russell 3000 was only 4.4% at the end of September, versus a long‑term average of about 7.6%, suggesting room for mean reversion in allocations. ^[16]
On an EV/EBIT basis, Franklin Templeton notes that small‑cap valuations relative to large caps are still near their lowest levels in 25 years. ^[17]

Breadth is improving

The Economic Times reports that since November 21, the Russell 2000 has outpaced the S&P 500, signaling a broadening out of the rally beyond mega‑cap tech. Wells Fargo strategist Doug Beath argues this “favorable change for small‑cap equities” reflects investor expectations for accelerating U.S. growth through 2026, aided by tax cuts, deregulation, further Fed easing and continued tech capex. ^[18]

Investors Business Daily and other outlets have also flagged multiple sessions over the past week where small caps led major indices, reinforcing the idea that this is more than a one‑day blip. ^[19]

The macro backdrop: Fed cuts and a “sweet spot” for small caps

Fed decision day: small caps in the spotlight

Today’s Fed meeting is the dominant macro catalyst.

Investopedia’s live coverage notes that futures markets assign roughly a 90% probability to a quarter‑point rate cut, which would bring the federal funds target range down to 3.5%–3.75%. The same report points out that the Russell 2000 hit a new all‑time high yesterday as traders positioned for easier monetary policy, emphasizing that smaller firms have historically outperformed when rates fall, thanks to lower financing costs and improving profits. ^[20]

The Economic Times echoes this, citing CME’s FedWatch tool and describing markets as “subdued but optimistic”ahead of the decision, with the Russell 2000 reaching a fresh all‑time intraday high and signaling a shift toward small‑cap stocks. ^[21]

In its morning wrap, XTB similarly stresses that the FOMC meeting has pulled markets into “wait‑and‑see” mode, with consensus centered on a 25‑basis‑point cut and intense focus on the tone of the Fed’s statement and updated projections for 2026. ^[22]

Seasonality: entering the small‑cap “sweet spot”

Beyond policy, seasonality is also working in small caps’ favor.

A recent segment on Yahoo Finance highlights that small‑cap stocks are entering their traditional seasonal “sweet spot” — mid‑December through early in the new year — when they have historically tended to outperform large caps. ^[23]

This seasonal tailwind, sometimes dubbed the “January effect” or small‑cap effect, often reflects:

Tax‑loss selling in beaten‑up names in November, followed by
Re‑buying, short covering and new‑year portfolio rebalancing in late December and January.

With the Russell 2000 already pressing against record levels, any positive surprise from the Fed or stronger‑than‑expected macro data could amplify this seasonal pattern.

Forecasts and expert analysis: 2026 could be big — if rates cooperate

Earnings growth: small caps vs the S&P 500

The earnings outlook is one of the strongest arguments bullish strategists make for the Russell 2000 today.

According to FactSet estimates cited by Barron’s, analysts expect Russell 2000 companies’ earnings to grow about 35% per year over the next two years, versus roughly 14% annual earnings growth for the S&P 500. ^[24]

That projected differential reflects several forces:

Small‑caps are emerging from a multi‑year “earnings recession”, so they have more room for rebound. ^[25]
Many small‑cap businesses have a larger share of floating‑rate debt, so falling short‑term rates can directly boost net income. ^[26]
A larger portion of small‑cap revenue is domestically focused, meaning they benefit more from any U.S.‑centric growth acceleration. ^[27]

Franklin Templeton’s analysis adds that small‑cap estimated earnings growth is expected to exceed that of large caps in 2025, reinforcing the thesis that the recent price catch‑up may only be the first phase of a longer leadership cycle. ^[28]

Valuations and flows

Despite the recent rally, small caps still appear inexpensive relative to large caps by several metrics:

As noted earlier, EV/EBIT multiples for the Russell 2000 vs. Russell 1000 remain near 25‑year lows, meaning investors are paying less for each dollar of operating earnings in small caps than in large caps. ^[29]
The index’s total return of 14.69% YTD, while strong, is still broadly in line with or slightly below many large‑cap benchmarks, suggesting room for further re‑rating if earnings deliver. ^[30]

Nasdaq.com and Zacks highlight a number of small‑cap stocks that have “skyrocketed” in 2025 and seen upward earnings revisions for 2026, including names in tech, shipping, regional banking and niche consumer segments — a micro‑level sign that the earnings tide is turning across the small‑cap universe. ^[31]

The bear case: rising yields and credit risk

Not all the headlines are rosy.

A MarketWatch analysis warns that the record rally in small caps “could run into a big problem in 2026” if Treasury yields continue to rise. Small‑cap firms tend to be more sensitive to borrowing costs and can be disproportionately hurt if credit spreads widen or refinancing becomes more expensive. At the same time, the article notes that fundamentals — including earnings revisions — are finally improving, putting the asset class in a “tug of war” between better profits and higher discount rates. ^[32]

Other risks strategists flag include:

Economic slowdown: If the Fed cuts because growth is weakening more than expected, small‑cap cyclicality can become a liability. ^[33]
Balance‑sheet stress: Companies with high leverage or floating‑rate debt may struggle if yields don’t fall as quickly as the market expects. ^[34]
Volatility: Cboe data show that the Russell 2000’s volatility index (RVX) has historically been higher than the VIX, underlining that small caps can move sharply in both directions. ^[35]

For investors, that means position sizing, diversification and risk management matter even more in small caps than in large‑cap benchmarks.

Liquidity and access: Cboe’s plan for nearly 24‑hour RUT options

A subtle but important structural development for the Russell 2000 is coming from the derivatives side.

On December 2, 2025, Cboe Global Markets announced plans to extend trading hours for Russell 2000 (RUT) index options to nearly 24 hours a day, five days a week, beginning February 9, 2026. ^[36]

Key points from the announcement:

RUT options, including Weeklys, will trade during Cboe’s Global Trading Hours from 8:15 p.m. to 9:25 a.m. ET, in addition to regular U.S. hours. ^[37]
Average daily volume in RUT options has climbed to nearly 75,000 contracts, up about 66% versus 2022, as more traders use options to manage small‑cap risk. ^[38]
Cboe notes that the Russell 2000 has historically been more volatile and more interest‑rate‑sensitive than large‑cap indexes, making its options a natural tool for hedging or expressing macro views. ^[39]

For global investors, longer trading hours should make it easier to hedge Russell 2000 exposure around key events — such as Fed meetings, economic data releases or geopolitical shocks — potentially increasing liquidity and tightening spreads in the underlying index over time.

What today’s setup means for small‑cap investors

Putting all of this together, December 10, 2025 finds the Russell 2000 at a critical inflection point:

Price is within a few points of record highs, suggesting strong momentum but also obvious resistance overhead. ^[40]
Macro conditions — especially Fed policy — are shifting in ways that historically favor small caps, but bond‑market volatility and credit conditions remain wild cards. ^[41]
Earnings forecasts and valuations together paint a compelling fundamental story, with projected earnings growth far above that of large caps and relative valuations still near multi‑decade lows. ^[42]
Seasonal patterns and the recent improvement in market breadth give the bull case extra fuel heading into year‑end and early 2026. ^[43]

For traders and long‑term investors alike, the key questions now are:

Does the Fed confirm the path of gradual cuts that the market has already priced in — or surprise hawkishly/dovishly?
Do rising yields and tighter credit offset the benefits of cheaper borrowing costs for small caps?
Can earnings actually deliver on the ambitious 35% growth expectations over the next two years? ^[44]

However those questions are resolved, the data and commentary from December 10, 2025 make one thing clear: for the first time in years, the Russell 2000 is back at the center of the market narrative, not just a sideshow to mega‑cap tech.