$IWM Falls 3.3% as Small-Cap Stocks Underperform Despite Falling Interest Rates

Small-cap stocks, represented by the iShares Russell 2000 ETF ($IWM), have shown notable underperformance in recent weeks. Despite a decline in interest rates, with the 10-year yield dropping by 10 basis points, $IWM fell by 100 basis points on June 3 and further declined by 3.3% from the previous day's premarket high on June 4. This divergence between small-cap stocks and interest rates is unusual and could be an early warning sign for the market. The underperformance of $IWM, especially as rates have fallen since late April, is not a positive indicator, with some analysts suggesting a potential breakdown. Additionally, the $IEF and $SPY have also been mentioned in relation to this trend.