Monday's big rally saw the Russell 2000 Index of small-cap stocks outpace the S&P 500's gains.

The move extends a trend of outperformance from small-caps this year.

Are small-cap stocks finally getting their moment to shine?

The Russell 2000 Index of small-cap stocks rose more than 2% Monday, ahead of the S&P 500's 1.2% gain, amid a broad market rally after President Donald Trump touted "productive conversations" with Iran.

The move extends a trend of outperformance from small-caps this year, thanks in part to increased volatility and expectations of stronger earnings relative to large-caps. The S&P 500 is down over 3% this year so far, compared to the Russell 2000's roughly 1% rise.

The outperformance from small caps to start the year could suggest growth is finally broadening beyond the biggest stocks, which dominated earnings gains and returns for the major indexes in recent years.

Though some experts are already warning Monday's rally on hopes of a coming resolution in Iran could be short-lived, small-caps could still outperform against a longer backdrop of heightened geopolitical uncertainty. Small-caps are generally "better positioned for elevated volatility," Bank of America analysts told clients in a note earlier this month. Value stocks are also seen faring better than growth stocks amid a risk-off environment, the analysts said.

Consensus estimates suggesting earnings for small-cap companies could exceed those of large-caps this year have added to optimism around smaller stocks.

While the war in Iran has dimmed the chances of a rate cut this year, small-caps could stand to get a boost if the war ends and the Federal Reserve eases rates—as it was seen doing before the war started. Markets are currently pricing in a 14% chance the Fed will cut rates at least once before the end of the year, up from 7% on Friday, according to CME's FedWatch tool based on fed funds futures data.

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