It is well known that the returns for the value-weighted S&P 500 index are strongly influenced by a few large companies. Those were once banks and energy, more recently the large technology companies. But performance by a few stocks can affect any index. The equally weighted Russell 2000 index, consisting of 2000 small U.S. stocks with a market capitalization less than $4.6 billion (as of 2024), is a common gauge of small-stock performance. In the first quarter of 2024, the prices of two stocks, MicroStrategy and Super Micro Computer, making up 0.1% of the index, surged, accounting for one third of the return on the index according to LSEG.
Index composition changes over time. In June 2024 both companies graduated to the Russell 1000, having passed the $4.6 billion mark. Super Micro Computer subsequently dropped 54%, now with no effect on the Russell 2000 index. That index losses its best performers and their subsequent returns when they graduate.
Based on Wall Street Journal report, September 10, 2024.