Stocks rise for 3rd consecutive week
NEW YORK — Small was beautiful this week.
The Dow Jones industrial average closed above 15,000 for the first time on Tuesday, then held above that milestone for the next three days.
But an index of small-company stocks has been putting the blue-chip gauge to shame. On Friday, the Russell 2000 closed the week up 2.2 percent, more than double the Dow's gain.
Investors are in love with small stocks because they stand a greater chance of surging than large, global companies do if the U.S. economy continues to fare better than Europe.
“GDP growth was 2.5 percent in the first quarter — not spectacular, but better than Europe,” said Joseph Tanious, global market strategist of JPMorgan Funds. “Europe is sucking wind.”
On Friday, the Dow, an index of 30 large-company stocks including global giants like IBM and Caterpillar, rose 35.87 points to close at 15,118.49 after flitting between gains and losses most of the day.
The Dow's meager gain of 0.2 percent was trumped by the 0.9 percent advance in the Russell 2000. The small-company index rose 8.90 points to 975.16. Both indexes, as well as the Standard & Poor's 500, closed at record highs. All three rose for a third straight week.
The sharp increase in small-company stocks is a sign that investors are more willing to take on risk. Small stocks can offer investors greater returns, but they are more volatile than large stocks.
Dow stocks were held back by falling commodity prices. Exxon Mobil, Caterpillar and Alcoa — Dow members whose fortunes are tied to the prices of crude oil and other basic materials — closed down 1 percent or more.