This week's rally is particularly encouraging for investors who like to invest in small-cap stocks. The Russell 2000 index, widely considered to be the small-cap index, is up about 3.8% for the week. This continues the momentum that’s been building for the last month, in which the index has climbed 15.7%.
Small-cap stocks are particularly sensitive to interest rates. Many of these companies rely on debt for their operations, which means, in some cases, it would be harder for companies to absorb higher tariff charges. Interest rates may not be coming down as fast or far as these companies expected. In the case of tariffs, the progress between the U.S. and China is encouraging, but there’s a difference between working toward an agreement and having an agreement done.
