It's America First, Multinationals Last as Tariff Threat Swells

(Bloomberg) -- Pick locally, retract globally.

That’s been the theme in U.S. stocks ever since reports surfaced that President Donald Trump was on the verge of announcing tariffs on steel and aluminum imports. He announced a meeting on the topic for Thursday afternoon at the White House.

The Russell 2000 Index -- a small-cap, domestically oriented gauge -- has trounced the Dow Jones Industrial Average by more than five percentage points over the past five sessions, its largest outperformance since the immediate aftermath of the 2016 presidential election.

It's America First, Multinationals Last as Tariff Threat Swells

Members of the Dow tend to have sizable international footprints, and are therefore more vulnerable in the event of a trade war that may raise input costs and restrict access to a global customer base. The small-cap index is now outperforming its multinational counterpart year-to-date, up more than 4 percent in March alone.

The Russell’s renaissance could serve as a countervailing force to the so-called Dow vigilantes -- investors who dump the blue-chip benchmark in a bid to deter the president from enacting protectionist measures.

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