On Tuesday, President Donald Trump announced the United States would be withdrawing from the international nuclear deal with Iran.
Oil prices, which many would’ve expected to rally on this news, declined on Tuesday, dropping 1.5% after hitting a four-year high on Monday. Stocks, meanwhile, initially declined but finished the day mixed with almost no change.
The Dow gained 3 points, or 0.01% on Tuesday, while the S&P 500 lost 0.7 points, or 0.03%, and the tech-heavy Nasdaq gained 1.7 points, or 0.02%.
Outperforming the broader market was the small cap Russell 2000, which gained nearly 0.5% and is outperforming the S&P 500 so far this year, rising about 2% amid a 1.5% drop for the benchmark index.
The rally in the U.S. dollar this year has certainly helped the small cap index, which is comprised of companies more closely levered to the domestic economy and likely to benefit from a stronger dollar than the S&P 500, which gets about half its revenue from overseas.
And as this chart from Bespoke Investment Group shows, the Russell is now back to outperforming the S&P 500 by a margin not seen in about six months.
The index is also more closely aligned to the fortunes of U.S. small businesses, which on Tuesday reported their best earnings growth in 45 years.
According to the NFIB’s latest small business optimism index, the ratio of small companies reporting higher earnings over the last three months to those reporting lower earnings is at the highest since the survey began in the 1970s.
“Never in the history of this survey have we seen profit trends so high,” said NFIB President and CEO Juanita Duggan. “The optimism small businesses owners have about the economy is turning into new job creation, increased wages and benefits, and investment.” The NFIB, we’d note, is a lobbying organization that represents small business owners nationwide and has historically given money to Republican causes and candidates.
But this data, along with the performance of the Russell 2000, backs up a notion that while a lot has been made of the S&P 500’s lackluster year in the face of strong earnings, investors have been reacting to positive earnings trends. Just not where everyone is looking, perhaps.
Now on the calendar on Wednesday, on the economics side, the only notable data set for release Wednesday will be the April reading on producer prices.
Fox’s results and the conference call that follows will be closely tracked by markets in the wake of this week’s news that Comcast (CMCSA) has prepared a $60 billion cash offer to acquire the company’s studio and film assets that it agreed to sell to Disney (DIS) in late 2017.
On Tuesday, Disney reported earnings for its fiscal second quarter that beat on the top and bottom lines, and following this release CEO Bob Iger told Bloomberg TV in an interview that he expects the Fox-Disney deal to go forward and that he’s confident regulators will approve the deal.
Investors will also be keeping an eye on Roku’s results, as the streaming video player has had a wild ride since its public debut last fall with shares more than doubling in the months that followed the IPO but giving back a good chunk of these gains this year.
Myles Udland is a writer at Yahoo Finance. Follow him on Twitter @MylesUdland