Small cap stocks have been on a tear since the Federal Reserve signaled an end to its cycle of rate hikes at Wednesday’s policy meeting.
Smaller listed companies are much more sensitive to interest rates than large caps, mostly because many higher relative levels of debt become more difficult to service when rates are high.
But with Fed rate cuts now expected in the early part of 2024, the Russell 2000 index has shot up to a 16-month high, having jumped 6.8% since the Fed announced its pivot to a more dovish policy stance on Wednesday.
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Monetary Policy Euphoria
“Nothing screams monetary policy euphoria more than the plethora of markets that have gone from year-to-date lows to now year-to-date highs all ...