Welcome to the home for real-time coverage of markets brought to you by Reuters reporters. You can share your thoughts with us at markets.research@thomsonreuters.com MIGHT MICRO-CAP MELTDOWN LEAD TO S&P 500 MISHAP? (0900 EST/1400 GMT) Despite a stellar-start to the 2021, micro-caps have struggled to keep pace for much of the year. The iShares Micro-cap ETF (IWC.P) peaked in mid-March, and is posting a 15% year-to-date gain vs the SPDR S&P 500 ETF Trust"s (SPY.P) 25% rise. Of note, on a weekly basis, the IWC/SPY ratio peaked in mid-March just shy of a 15-year resistance line: SPY12142021 SPY12142021 Perhaps not surprisingly, it was also around this time, that the retail-driven meme-stock mania was its most intense. Highly speculative stocks, like micro-caps, tend to have greater volatility and are thus inherently riskier than larger-cap shares. They can, therefore, be especially sensitive to the key drivers of liquidity and psychology. Recently, the performance disparity between the IWC and SPY has been particularly acute. Since November 8, the IWC has lost more than 13%, while the SPY is off just 0.6%, having just recorded a fresh record close last Friday. With this, the IWC/SPY ratio has plunged to its lowest level since November 2020. Meanwhile, the severity of the ratio"s decline from its peak has been especially sharp. In fact, in the time since the IWC topped in relative strength vs the SPY, the ratio"s 40-week rate-of-change has collapsed to an all-time low. It now remains to be seen if the micro-cap ship can be righted in the midst of tax-loss season and building fear-of-the-Fed. However, of concern for the S&P 500, from 2007 to 2020, the five biggest SPY declines from record-high territory were all preceded by protracted IWC/SPY ratio divergence. (Terence Gabriel) ***** FOR TUESDAY"S LIVE MARKETS" POSTS PRIOR TO 0900 EST/1400 GMT - CLICK HERE: read more Terence Gabriel is a Reuters market analyst. The views expressed are his own Our Standards: The Thomson Reuters Trust Principles.