MW Here's how much a 'Bro Billionaire' group of stocks is trouncing small caps under Trump

By Joy Wiltermuth

Small-cap stocks were supposed to benefit from Trump's policies

President Donald Trump's re-election in November raised expectations that his agenda would bolster America's beleaguered industrial core and help small businesses prosper.

So far, so-called Bro Billionaire stocks have trounced shares of small companies, according to a team led by Michael Hartnett, investment strategist at BofA Global Research.

For the "Bro" category, the BofA team took an equal-weighted average of a group of popular stocks from the technology and cryptocurrency realms, including Palantir Technologies Inc. (PLTR), a data-mining company and recent recipient of a U.S. government defense contract.

While the elite group of stocks was up more than 45% since Trump's election, the Russel 2000 index RUT of small-cap stocks was down about 7%, according to the team.

The "Bro" group also includes artificial-intelligence heavyweight Nvidia Corp. $(NVDA)$, as well as Meta Platforms Inc. $(META)$, Telsa Inc. $(TSLA)$, Interactive Brokers Group Inc. $(IBKR)$, the ARK Innovation exchange-traded fund ARKK, Coinbase Global Inc. (COIN), Apollo Global Management Inc. $(APO)$ and XBT, bitcoin's (BTCUSD) international ticker.

Trump's sweeping April 2 tariffs initially shocked Wall Street and hit highflying tech stocks particularly hard. Large-cap stocks have recovered the lost ground during Trump's 90-day pause on some tariffs, which is set to expire in early July.

Tesla's stock was down more than 25% on the year, hurt by falling electric-vehicle sales. This week also saw a widening public feud between Trump and Tesla CEO Elon Musk, who until recently was Trump's close political adviser.

Read: Don't buy Tesla's stock as Trump and Musk feud - yet. Here's the price to watch.

Despite initial hopes for 2025, the long-awaited resurgence of small caps has yet to materialize in a lasting way. Tariffs, and uncertainty around them, can weigh on small businesses more than on megacap tech companies, which have amassed huge cash piles.

In addition, small-cap companies often require regular access to financing. That's been harder to come by, and more expensive, with longer-duration Treasury yields elevated since Trump's election.

A key concern in the bond market has been that the Republican budget bill now under consideration in the Senate could substantially add to the large U.S. deficit instead of taming it, which could in turn require more Treasury issuance and lead to some uncertainty around what level of yield investors might require.

See: What's at stake if world's most powerful market finally buckles after decades-long U.S. debt splurge

Still, stocks big and small were jolted higher Friday, with the S&P 500 index SPX briefly climbing back above the 6,000 mark after a jobs report for May showed more resilience than expected in the labor market. Still, there were more than 7 million Americans out of work and little certainty on tariffs.

Meanwhile, the 10-year Treasury yield BX:TMUBMUSD10Y was climbing 10 basis points on Friday to 4.49%, according to FactSet.

Higher yields matter because they make it more expensive to take out a new mortgage, car loan, corporate loan or other forms of debt that help finance the economy.

Check out: You can find stock-market bargains now - but you have to break with the S&P 500

-Joy Wiltermuth

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June 06, 2025 13:02 ET (17:02 GMT)

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