U.S. small cap stocks, often a barometer of investors' risk appetite, surged after the election of President Donald Trump, while larger cap stocks also rallied, just not by as much. Part of the reason why small cap stocks outperformed is due to reinforced faith in the U.S. economy that may benefit these companies. Meanwhile, part of the reason why large cap stocks lagged is due to their perceived sensitivity to the U.S. dollar on their foreign earnings.
Large companies may be more sensitive to currencies than smaller companies
Speaking of the dollar first, according to Standard & Poor's, 44.3% of the earnings of companies in the large-cap S&P 500 come from abroad. This income is derived from local currency, which is then translated into dollars, at least for reporting purposes (it isn't necessarily repatriated into the U.S.). Since…
