Bank of America said that small-cap stocks have reached their lowest level in 14 months and are much cheaper than large-cap stocks.

The bank's analysts said in a report on Monday that although this does not necessarily mean that the hard-hit small-cap stock prices will soon rebound,butThis could be a sign that the sector will return better in the long run.

The 2,000 companies in the Russell 2000 Index are regarded as small-cap stocks; they only account for less than one-tenth of the total market value.But because of their smaller size, these companies are far more sensitive to emerging economic pressures. Since this year, rising interest rates, concerns about a potential recession, and banking system instability have plagued small-cap stocks.

So far this year, investors have been withdrawing from small-cap stocks. The performance of small-cap stocks is clearly inferior to that of large-cap stocks. The Russell 2000 index fell 3.1%, the S&P 500 index rose 15%, and the Nasdaq index rose 32% during the same period.

The Bank of America said that with the recent stock sell-off, the price-earnings ratio of the Russell 2000 Index fell to 12.3, the lowest in 14 months. At the same time, in terms of market capitalization, small-cap stocks remain the cheapest sector. Their trading price is 19% lower than the historical average, while the trading price of mid-cap stocks is 4% lower than the historical average, while the trading price of large-cap stocks has a 12% premium over the historical average. Analysts said,

The relatively low valuation of small-cap stocks does not necessarily mean that their prices will rise soon, because valuations are often a poor indicator of short-term timing, but in the long run, they are more explanatory.