A trader works on the floor of the New York Stock Exchange (NYSE) at the opening bell in New York on March 18, 2026.
Angela Weiss | Afp | Getty Images
The Russell 2000 has fallen more than 10% from its recent peak, becoming the first of the major US benchmarks to fall into correction territory in 2026.
The small-cap index closed Friday down 10.9% from its all-time high. A decline of more than 10% and less than 20% is considered a correction.
Stock chart iconStock chart icon
Russell 2000, 1 year
Small caps actually performed better earlier in the year, with the Russell 2000 down just 2% in 2026, as hopes of looser monetary policy and a shift away from large caps buoyed the asset class.
But the benchmark has slumped this month due to the ongoing Iran war, leading to a rise of more than 50% Brent crude oil futures. The Russell 2000, which has greater exposure to cyclical sectors, is particularly sensitive to changes in oil prices and a slowdown in the business cycle. This month it is down more than 7%.
“Typically it’s the smaller companies that have to strike first,” said Sam Stovall, chief investment strategist at CFRA Research. “Questions about slowing economic growth, stagflation or even recession are more likely to negatively impact small caps than large caps, putting them in a difficult position.”
The Russell 2000 could soon be followed by other major averages. Both those Nasdaq Composite and the Dow Jones Industrial Average fell into correction territory on an intraday basis on Friday, although each closed just above these levels.
The S&P 500 is 7% below its recent peak.
Choose CNBC as your preferred source on Google and never miss a moment from the most trusted name in business news.