US small-cap stocks hit record high: What's driving the rally
The Russell 2000 index, which tracks about 2,000 US small-cap companies, just hit a record high of 2,466.86 points—bouncing back impressively from its April slump.
This marks a strong comeback for smaller firms after months of trade worries and tariff drama.
Factors at play
If you're curious about investing or just like seeing underdogs win, this is big: Small-cap stocks are beginning to catch up to the bigger players.
The buzz around an upcoming Federal Reserve interest rate cut means cheaper loans for these companies, which tend to benefit from a lower interest-rate environment.
Plus, Trump's sweeping tax cut bill, passed by the Senate in July, and easing trade tensions are giving them an extra lift.
The bottom line
Lower borrowing costs (thanks to expected Fed rate cuts), fresh tax breaks passed in July, and reduced tariff pressures are all fueling investor confidence in smaller US businesses.
While the Russell 2000 is up about 10.6% so far this year—just behind the S&P 500's gains—it's showing real momentum as market conditions improve for small caps.