Why Small-Cap Stocks Could Be Ready to Outperform After Rate Cuts

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US Small Cap 2000 Notícia

Ishares Russell 2000 ETF,Direxion Daily Small Cap Bull 3X Shares

Stocks Analysis by MarketBeat.com (Ryan Hasson) covering: US Small Cap 2000, iShares Russell 2000 ETF, Direxion Daily Small Cap Bull 3X Shares. Read MarketBeat.com (Ryan Hasson)'s latest article on Investing.com

), small-cap stocks are especially sensitive to interest rate changes. Historically, after the Federal Reserve implements rate cuts, all market cap sectors tend to rally, but small caps often outperform their larger-cap peers.

Earlier in 2024, small caps underperformed large caps because the expected rate cuts were delayed, resulting in a historically wide performance gap between the two. Small caps lagged, but now that rates have been cut by 50bps, the landscape could shift. Small-cap stocks' valuation remains relatively attractive, allowing investors to capitalize on a potential rebound.

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