Despite bursts of outperformance, small- and mid-cap stocks (SMID) have underperformed large-caps year to date -- as they have over the past five years. But they may be in a better position to generate market-beating returns going forward. For one thing, SMID companies tend to focus on domestic markets, so their businesses could be less disrupted by the trade and tariff debate, or fallout from unrest in the Middle East, the Russian invasion of Ukraine, issues in China, or other geopolitical developments. As well, the prices of SMID stocks generally are lower than the prices of large-caps. Finally, there are long stretches in the record books when SMID stocks have outperformed large-caps. SMID stocks can be risky, but despite those risks, diversified investors look to have exposure to small- and mid-caps based on the long-term performance record. We estimate that 20% of the U.S. stock market's capitalization is comprised of SMID stocks.

Itron is a technology provider serving the global energy and water industries. Since its founding in 1977, the company has provided handheld computer systems for collecting data from meters. Itron also offers hardware, software, and services that integrate the creation, collection, measurement, management, and forecasting of data, thus allowing utilities to share critical knowledge with other market participants, including end users. More than 8,000 customers in more than 100 countries use the company's technology to optimize their delivery and use of energy and water. Headquartered in Liberty Lake, Washington, Itron employs about 5,000 people. ITRI shares are a component of the Russell 2000 Index.

March 10, 2025: Is Inflation Budging? The next batch of inflation data comes out this week. The Nasdaq has crossed back and forth into and out of correction territory. The S&P 500 has also turned negative for the year. The Dow Jones Industrial Average is clinging to positive ground. Last week, the Dow lost 2.4%, the S&P 500 dropped 3.1%, and the Nasdaq lost another 3.5% and now is down 9% from its high in mid-December. Year to date, the Dow is up 0.6%, the S&P 500 is down 2%, and the Nasdaq has lost 6%. On the economic calendar, the key CPI inflation report is due on Wednesday. For January, CPI came in at 3.0% and Core CPI, excluding food and energy, was at 3.3%. For February, Argus Chief Economist Chris Graja forecasts CPI at 2.9% and Core CPI at 3.2%. Also on the calendar this week is the Job Openings and Labor Turnover Survey (JOLTS) report and the NFIB Small Business Optimism Index on Tuesday; wholesale inflation indicator PPI on Thursday; and consumer sentiment on Friday. Chris Graja's Economic Call of the Week is the NFIB Small Business Optimism Index for February, which he expects to decline to about 101 from last month's 102.8. That would remain above the pre-election 93.7 in October and the 51-year average of 98. This indicator, due on Tuesday from the National Federation of Independent Businesses, is especially important because 'smaller' businesses employ about half of the U.S. private workforce. Chris offered the following thoughts. 'We expect to see that small businesses remain optimistic for about the next six months, but it may be getting harder. The NFIB's Uncertainty Index jumped in January and only one of the Optimism Index's 10 components rose, while seven decreased and two were unchanged.' Earnings season is essentially over. The list of stragglers reporting this week includes Ciena, Dick's Sporting Goods, and Kohl's on Tuesday; Adobe on Wednesday; and Ulta Beauty and Dollar General on Thursday. For the fourth quarter, corporate America booked a strong 17% EPS growth rate when compared to the prior-year quarter and 9% growth compared to 3Q24. Financial, up 35%, and Communication Services, up 32%, were the top performing sector. All sectors were higher except Energy, which fell 29%, according to Refinitiv. Argus forecasts 12% EPS growth for 2025 and 11% EPS growth for 2026. Last week, Argus Chief Economist Chris Graja nailed the jobs report. Nonfarm Payrolls came in at 151,000 for January. Chris' call was for 150,000. The Unemployment Rate ticked up to 4.1%, matching his forecast. Chris' Call of the Week, the ISM Services Index, also did well. He noted that this statistic was important because the services sector accounts for almost one-half of the U.S. economy. Well, the news was good: the index reading was 53, above the break-even point of 50 and signaling that the economy is likely to remain on a growth path, despite the potential impact of government layoffs, tariffs, and trade wars. In other news from last week, the Atlanta Fed GDPNow indicator fell further and now forecasts a decline of 2.4% for 1Q, indicating contraction. As of mid-February, the reading was for expansion of 2.3%. The Cleveland Fed Inflation Nowcast is forecasting a 2.5% rate for CPI in March. That's lower than forecasts for the February rate, so is moving in the right direction. Mortgage rates continued their decline, dipping 13 basis points, with the average 30-year fixed-rate mortgage now at 6.63%, according to FreddieMac. Gas prices dropped a nickel to an average price of $3.08 per gallon for regular gas. Looking ahead, the next Fed rate decision is on March 19, with odds at just 2% for a rate cut, according to the CME FedWatch rate tool. After that, the next meeting is on May 7, with odds at 37% for a cut.

Itron is a technology provider serving the global energy and water industries. Since its founding in 1977, the company has provided handheld computer systems for collecting data from meters. Itron also offers hardware, software, and services that integrate the creation, collection, measurement, management, and forecasting of data, thus allowing utilities to share critical knowledge with other market participants, including end users. More than 8,000 customers in more than 100 countries use the company's technology to optimize their delivery and use of energy and water. Headquartered in Liberty Lake, Washington, Itron employs about 5,000 people. ITRI shares are a component of the Russell 2000 Index.