The Federal Reserve’s impending interest rate cut has small-cap sectors poised for a shakeup. While the Russell 2000 surges, not all small caps will benefit equally. This article explores which sectors are primed for growth, highlighting key ETFs for investors to consider.
Wall Street saw a slight uptick on Tuesday, fueled by anticipation of the Federal Reserve’s first interest rate cut in over four years. Small-cap stocks were particularly strong, with the Russell 2000 index reaching its highest point since early August. Meanwhile, positive retail sales data tempered expectations for a dramatic rate cut, pushing up short-dated Treasury yields and boosting the dollar. Oil prices rose on escalating tensions in the Middle East, while Bitcoin saw a surge driven by ETF inflows.
This week’s Federal Open Market Committee (FOMC) meeting and the September option expiration (op-ex), a Triple Witching event, are expected to significantly impact market direction. This could be especially bullish for small-cap stocks, represented by the IWM ETF, as interest rate cuts can boost their growth potential.
