Stocks are at records, credit markets are showing strain, and small caps are in the middle of the debate. The picture is more mixed than the headlines suggest.

The S&P 500 and Nasdaq hit record highs on Tuesday. The Russell 2000 closed at 2,830, about 8% below its third-quarter high of 3,068 but still up roughly 14% this year, after finishing 2025 near 2,482. As of July, it had also outpaced the S&P 500 over six months (16.9% versus 8.9%) and one year (20.0% versus 9.9%), according to Benzinga.