Small-cap stocks have surged back into the spotlight, driven by shifting rate-cut expectations. The Russell 2000 Index (RUT), a benchmark for small-caps, is now up more than 10% on a YTD basis, with nearly all of that gain collected over just the past month.
The resurgence in small-caps has been fueled by rising expectations for an interest-rate cut at the Fed's September meeting, which should be particularly beneficial to smaller companies that depend on financing to fuel their growth. At the same time, investors are seeking alternatives to the mega-cap tech giants that have led this bull market higher - and whose high valuations now bring to mind memories of the dotcom bubble for some wary analysts.
