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Dictionary / The stock market

What Is the Russell 2000?

The Russell 2000 is a stock index of about 2,000 small US companies. It is the most common way to track how smaller American businesses are doing.

Why it matters

Big indexes like the S&P 500 are dominated by giants. The Russell 2000 shows the health of smaller companies, which do more of their business inside the US. Many see it as a measure of the local economy.

How it behaves

Small companies usually swing more than big ones. They often have more debt that must be refinanced, so they are sensitive to interest rates. They can jump when rates fall or the economy picks up.

How to invest in it

Through index funds or ETFs that copy it.

Related terms

S&P 500500 large US companies in one index. Market capWhat the whole company is worth on the market. VolatilityHow much and how fast a price moves. Interest ratesThe price of borrowing money. Index fundA fund that copies a market index. Nasdaq CompositeAn index of almost every stock on the Nasdaq.

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