U.S. Markets close in 1 hr 11 mins

Contrarian Stock Signal Echoes in Record Small-Business Optimism

Cormac Mullen
Contrarian Stock Signal Echoes in Record Small-Business Optimism

Will record levels of optimism among U.S. small-business owners keep the fire burning beneath a small-cap rally that itself has reached new highs? While the number of respondents saying it’s a good time to expand reached a record 34 percent last month, according to a National Federation of Independent Business survey released Tuesday, previous peaks have actually led to short-term stock declines. Since 1979, the Russell 2000 Index has declined on average 2.9 percent in the six months following a peak in the NFIB “Good Time to Expand” gauge, according to a study from Jason Goepfert, president of Sundial Capital Research Inc. The average decline over a three-month period was 0.4 percent, he said.