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.

U.S. stocks fell on Thursday on tariff concerns, recent inflation data and the risk of a U.S. government shutdown. Intel (INTC) shares rallied on news that Lip-Bu Tan had been named CEO. The S&P 500 fell 1.4%, the Dow was down 1.3% and the Nasdaq lost nearly 2%. Gold closed just above $3000 per ounce.

Wisconsin-based Oshkosh is an industrial manufacturer of specialty vehicles and truck bodies. The company has 12 brands and three reporting segments: Access Equipment, Defense, and Vocational. The company has approximately 18,000 employees. The shares are a component of the S&P 400 Mid-Cap Index.

Wisconsin-based Oshkosh is an industrial manufacturer of specialty vehicles and truck bodies. The company has 12 brands and three reporting segments: Access Equipment, Defense, and Vocational. The company has approximately 18,000 employees. The shares are a component of the S&P 400 Mid-Cap Index.