Good morning, investors. Earnings and market moves drove headlines galore on Tuesday, and SpaceX led the flashiest names in the market to jump to conclusions about the state of the AI trade.

But the boring, often-ignored small-cap index does not seem to care.

The Russell 2000 just closed at an all-time high but most investors barely noticed.

The record confirms the bull market has indeed broadened out beyond the Magnificent 7, but because that strength is showing up in a corner that Wall Street isn’t focused on, bears continue to sound the alarm on a top-heavy market.

The small-cap index rose 1.5% Tuesday to its first-ever close above 3,000, though that happened the same day that the S&P 500 touched a record and zeitgeisty names like Palantir, SpaceX and AMD saw big swings following earnings.

The investors who have made money this year in small-cap stocks do not likely mind the deluge of tech headlines, given that the Russell 2000 won’t stop marching higher.

It’s coming off its best first-half of the year since 1991.

Not only has it outpaced each of the three major US indexes year-to-date by almost double-digits, but it has nearly 5x the total returns of the Magnificent 7.

That momentum shouldn’t surprise anyone who has kept up with earnings.

Consensus full-year earnings growth for small-cap stocks now hovers at 38%, up from 23% at the start of the year, according to LPL Financial.

To be sure, just because small-cap stocks are winning does not mean every small-cap name is a winner.

The Russell 2000 always houses suspect and money-losing public companies that are still figuring out the big leagues.

That invites froth and speculation, of which the AI boom has plenty to go around.

Since the middle of last year, unprofitable small-cap stocks have gained more than 150%, more than four times the return of their profitable peers, HSBC calculations showed in July.

Meanwhile, small stocks remain the most sensitive to Fed interest rates, which the market still sees rising before the end of the year.

But even with those risks in mind, the Russell 2000 is doing its best to remind investors that the AI trade has juiced asset prices beyond household technology names.

That’s not what typically happens as a bull market ends.

🚀 SpaceX crushed estimates in its first earnings report. Shares ticked lower but the company reported revenue of $7.8 billion versus $6.8 billion estimates. Capex came in at $18.37 billion, just below estimates for $18.58 billion. (Yahoo Finance)

📊 Amazon crossed $3 trillion market cap for the first time. Founder Jeff Bezos filed the same day to sell another $4 billion in shares under a pre-planned 10b5-1 program, bringing his 2026 total to nearly $10 billion. (CNBC)

🛢 Oil prices fell again on hopes of a US-Iran deal. WTI tumbled to its lowest level in a week after Treasury Secretary Scott Bessent told CNBC that an agreement could come as soon as Wednesday. (FXStreet)

📈 Semiconductors just had their best day in months. The PHLX Semiconductor Index rallied 6%. Marvell, Sandisk and SK Hynix led a group that has now added more than $1 trillion in market cap since June. (Yahoo Finance)

I sat down with veteran strategist Lou Basenese to discuss hyperscaler free cash flow, why he likes the biotech sector, the specific trades and stock picks he’s positioned for in the second half of 2026, and more.

Tune in on Spotify, Apple Podcasts, or YouTube — and please leave a review on your favorite platform!

🗓 August 5, 2011: Standard & Poor's downgraded the US credit rating from AAA to AA+ for the first time in the nation's history, citing paralyzing debt-ceiling politics.

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