DWCPF and RUT Indices Should Reach New Record Highs This Cool Season (Nov 11, 2024 - March 31, 2025)

Most indices with larger cap companies have set or continue to set new record highs in 2024, including the Dow Jones Industrials, the Nasdaq 100, and the S&P 500.  With the Federal Reserve trending to cutting rates downward in line with inflation trending down, this should present a favorable backdrop for smaller and mid cap companies to borrow money from banks at lower interest rates.  A lesser regulatory environment and potential tax cuts under the President Trump Administration (with Republicans controlling both the House and Senate) should be supportive of stronger economic growth in the U.S.  

The following chart shows the S&P 500 (primarily comprised of larger cap companies) essentially at an all-time record high. 

The Dow Jones Industrials is also at record highs (not shown).  

The Nasdaq 100 (chart below), also at all-time record highs, is an index comprised of 100 of the largest non-financial companies listed on the Nasdaq stock exchange (Source: Wikipedia). 

 
 
 
The following chart of the DWCPF (which is tracked by the Federal Government Thrift 401K S-fund)
is comprised of small-mid cap companies. This zoomed out chart going back to 2006 makes it appear as though this index is already at a record high, however that is not the case. 

If we zoom in on the 5 year chart from Yahoo Finance (shown below), this shows that DWCPF actually hit 2398 on November 7, 2021 which would be it's record high. Therefore, the index is rising toward it's record high but has not hit or surpassed it yet.  (The Russell 2000 (small cap company index) chart (not shown) looks similar in that it has not yet achieved a new record high since 2021 (2,449.14), but is extremely close.)

Given the favorable backdrop for lowering interest rates and inflation, and the potential for tax cuts coming, I am forecasting both the ^DWCPF (S-Fund) and Russell 2000 (^RUT) to hit and blow past prior record highs set in 2021.  I am projecting a target of 2,650 on the ^DWCPF (S-Fund) to be reached or exceeded by March 31, 2025.  This would be a 12.3 percent increase from this past Friday November 8th closing price of 2,358. There will likely be periods of profit taking between now and March 2025, but I expect an upward bias to continue with both ^DWCPF and ^RUT.  

References: 


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