A Small-Cap Anomaly

Small-capitalization stocks have been leading the market's rally this year: While the S&P 500 index, which is made up of large-cap stocks, has risen by 15 percent in 2013, the Russell 2000 index, which is made up of small-cap stocks, is up 21 percent. Small-cap stocks are typically defined is those with less than $2 billion in market capitalization.

But the stocks in the Russell index have grown so much that they've distorted what it means to be a small-cap stock. According to research from the trading firm Miller Tabak, there are now 35 stocks in the Russell 2000 that have blown past the traditional $2 billion limit and are now valued at anywhere between $3 billion and $4 billion.

And it's those larger stocks that have really driven the index's performance. The smallest group of small-cap stocks, those with market capitalizations below $200 million, actually lost 34 percent so far this year. But the ones that are growing themselves out of the index, stocks in the $3 billion to $4 billion range, have risen by a whopping 234 percent.

Jobs Grow Here at Home

The Labor Department released a study of unemployment by city yesterday, and there was good news for our area: The largest year-over-year employment increase in the nation took place in the New York-Northern New Jersey metro area, where we added 189,400 jobs. Of course, we're also the largest metro area in the country to begin with.

Most areas did show improvement over the past year. All told, 320 of the nation's 372 metropolitan areas had more jobs this year than they did a year ago. Among the 37 metro areas with at least 750,000 jobs, 36 of them showed improvement, with the lone laggard being Cleveland, which saw employment drop by 0.4 percent.

The city with the lowest unemployment rate is Bismarck, North Dakota, with just 2.5 percent, a beneficiary of the natural gas boom that's going on in that state. The highest unemployment rate belongs to Yuma, Arizona, with a staggering 34.5 percent.

America Warming Up to Bankers

The financial sector was widely seen as the chief culprit behind the economic collapse of a few years ago, but has been much stronger in recent years lately. That could explain why, according to Gallup, banking has shown the greatest improvement this year in its public image rating of any industry. It still has a net negative rating, at -10 percent, but that's 18 percentage points better than it was last year.

Other industries showing strong improvement in their public image this year include the travel industry (up 14 percentage points), the real estate industry (up 13), and the airline industry (up 12). The biggest loser was the health care industry, which had a neutral ranking in 2012, but now has a net negative image of  -13 percentage points.

Overall, the sector viewed most positively by the American public is the computer industry, with a net positive image of 54 percentage points, followed by the restaurant industry at 48 points. The industry with the worst image? Oil and gas, at negative 31.

Tracking Americans' Income

The economy has recovered in many ways from the recession, but one area in which is still lags is household income. As of June of this year, median household income was at $52,100, which is 6 percent below where it was in December 2007, the beginning of the recession.

But it's also well above where household income bottomed out in the post-recession years. The low for that mark in recent years was $50,700, in August 2011. We've rebounded 2.8 percent since then.

As that date shows, household income continued to decline even after the recession ended. At the technical end of the recession, in June 2009 - when the economy went from contracting to expanding - median income was at $54,500. After that point, the figure still dropped another 7 percent before starting back upward.

Americans' Tiny Retirement Savings

What do you think is the average amount of money an American has saved for retirement? It's probably lower than you think. According to the National Institute on Retirement Security, the median retirement savings balance for working households is just $3,000.

Now, that's skewed, because it includes younger families that are just starting out. But for households in the age range between 55 and 64, that figure is still just $12,000.

The biggest difference comes for people who have set up a retirement savings account, an IRA or a 401(k). For those households, the median retirement savings is $100,000. That's not nearly enough, but it's a step in the right direction.

Closing Down the Market

As you probably know, the Nasdaq stock market was shut down for three hours yesterday afternoon due to software problems. The big fear after one of these is that the market might take a sudden downward lurch once everything is back online, but that didn't happen yesterday; the Nasdaq index finished up a quiet 1.1 percent for the day.

This isn't the first time an exchange has had to shut down. Last October, Superstorm Sandy forced the closure of the New York Stock Exchange for full two trading days. Between 1995 and 2001, the NYSE had to shut down three separate times over electronic problems.

And a generation ago, the Nasdaq had to deal with even more embarrassing issues. On two separate occasions, in 1987 and 1994, a squirrel chewed through power lines near the exchange's headquarters in Connecticut, creating power outages that caused the market to close down. Near as anyone knows, there were no squirrels involved in yesterday's shutdown.

A Tough Time for Hedge Funds

It’s been another tough year for hedge funds, according to researched compiled by Goldman Sachs. The typical hedge fund is up by about 4 percent this year through August 9. By contrast, the S&P 500 Index, including dividends, has risen by about 20 percent over that same period.

The trends we saw last year have only gotten worse for the hedge funds in 2013. In 2012, hedge funds posted an average gain of 8 percent, while the S&P with reinvested dividends posted a return of 16 percent.

Goldman’s research looked at more than 700 hedge funds. Among that group, less than 5 percent of them have outperformed the S&P 500 so far this year. But 25 percent of them have actually lost money in 2013.