Key Points
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The good news is that a good chunk of negativity has been priced into small-cap names.
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There’s also hope the Federal Reserve will soon cut interest rates, which could significantly boost small-cap stocks.
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After a rocky, tariff-induced pullback in the iShares Russell 2000 ETF (NYSEARCA:IWO), it’s starting to show signs of life again. Up about $6 on the day, it’s now up to $240.67.
Helping, there’s hope we could see de-escalating trade war tensions. In fact, according to US Treasury Secretary Scott Bessent, the standoff with China is unsustainable and should soon deescalate. Granted, negotiations haven’t started yet, but a deal is possible, he added.
There’s also hope the Federal Reserve will soon cut interest rates
Should that happen, small caps could be some of the biggest beneficiaries. That’s because a lower rate would reduce interest expenses on debt.
According to Yahoo Finance, “Traders boosted their bets on the number of Fed cuts this year to five and pulled forward their estimate of when those cuts could begin, starting at the next meeting on May 6-7. The odds of a May cut are now above 50%.”
“This would be a PERFECT time for Fed Chairman Jerome Powell to cut Interest Rates. He is always ‘late,’ but he could now change his image, and quickly,” said President Trump, adding, “CUT INTEREST RATES, JEROME, AND STOP PLAYING POLITICS!”
The IWO ETF is Also Benefiting from Rebounding Small-caps
Fueling even more upside are stocks like Root (ROOT), which is up about 10% on the day. Last trading at $131, ROOT is one of the biggest small-cap rebounders of the day. While we’re not seeing any new news to support the move, it just starting to pivot oversold conditions.
Bitcoin mining stocks, like Hut 8 Corp. (HUT) are up about 9% on the day, as Bitcoin rallies about $3,400 higher. Other miners like CleanSpark (CLSK) are up about 13%. Cipher Mining (CIFR) is also up about 13%. Even Terawulf (WULF) is up about 15%.
All of which are helping to fuel the Russell 2000 Index and the iShares Russell 2000 higher on the day.
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