Russell 2000
The Russell 2000 is a stock index of about 2,000 small US companies and the most widely used benchmark for US small-cap stocks.
The Russell 2000 measures the performance of the small-cap segment of the US stock market. It is maintained by FTSE Russell and consists of the roughly 2,000 smallest companies in the Russell 3000 index, which covers most of the investable US market.
Membership is based mainly on market capitalization. The index is reconstituted on a set schedule: companies that have grown too large move up into the Russell 1000, while new small companies are added. Reconstitution days typically bring very high trading volume as index funds adjust their holdings. Weights within the index are based on float-adjusted market capitalization.
Because small companies tend to depend more on the domestic economy and on borrowing, the Russell 2000 is often seen as a barometer of US economic conditions and sensitivity to interest rates. It has generally been more volatile than large-cap indices such as the S&P 500.
The Russell 2000 has many companies that are not yet profitable, which makes measures like its average P/E ratio harder to interpret. Many ETFs, futures and options track the index.