Small-cap stocks benefiting from Fed rate-cut bets: strategist

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U.S. stocks with small market capitalizations have been driven higher this month thanks to optimism that the U.S. Federal Reserve is nearing an interest rate cut, according to one strategist.

Quincy Krosby, chief global strategist for LPL Financial, joins BNN Bloomberg to discuss the surge on small caps.

“ are interest rate-sensitive. They’ve got more debt and the debt is predicated on commercial bank floating rates. This would allow them to obviously enjoy servicing at a lower rate,” she said. Krosby said another recent support for U.S. small-caps has been stronger-than-expected economic data. Krosby added that with that in mind, broader markets will be looking to the Fed’s announcement this week in the hopes that rates will be cut due to falling inflation rather than weakness in the U.S. economy or jobs market.

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