Small and medium-sized US companies suffered a complete wipeout in profits in the second quarter because of the Covid-19 crisis, in sharp contrast to large multinationals that emerged from the most intense phase of the pandemic in better shape.
As the earnings season draws to a close, companies within the Russell 2000 stock index — the small-cap benchmark — have reported an aggregate loss of $1.1bn, compared to profits of almost $18bn a year earlier, according to data provider FactSet. Meantime, the much bigger companies within the benchmark S&P 500 index have posted a 34 per cent aggregate drop in earnings, to $233bn.
Investors said the figures underline a divide between the small companies that have been squeezed by the Covid-induced recession and the bigger companies that “have the strength to ride out whatever is thrown at them,” said Margie Patel, a senior portfolio manager at Wells Fargo Asset Management.