Small-cap stocks are the hottest trade in the stock market right now, and they soared again on Tuesday | Real Time Headlines

Small-cap stocks are on a tear right now, having taken over the baton from Big Tech last week to lead the bull market on hopes that lower interest rates will extend the economic recovery to their benefit.

this Russell 2000 IndexThe group’s benchmark index rose 2% on Tuesday after hitting its highest level since January 2022 on Monday. Bespoke Investment Group said if the index rose another 1% on Tuesday, it would be the fifth time since 1979 that the index has gained more than 1% for five consecutive days.

The small-cap benchmark has gained 11% over the past month, nearly three times the S&P 500’s gain.

Tom Lee of Fundstrat, Who correctly predicted the stock market? Small-cap rallies over the past few years can last more than two months, and this group has made huge gains.

“We think this move may take about 10 weeks, up to 40%. I think this is just the beginning,” Lee said on CNBC on Monday.Ending bell: overtime”.

Investors are turning to previously unpopular corners of the market Inflation data cools Speculation grew last week that the Federal Reserve could soon cut interest rates and avert a recession. Small-cap stocks are generally more sensitive to swings in the economy and market sentiment, and could benefit significantly from falling interest rates.

Additionally, the group has gained attention as a “Trump trade” among investors and is seen as a potential beneficiary of former President Donald Trump’s victory in November.

While Trump has no detailed second-term policy proposals, he would lower taxes and regulations while raising tariffs Could boost domestic stocks, including small capsDavid Costin, chief U.S. equity strategist at Goldman Sachs, said.

Betting market odds for Trump to win the election have climbed steadily in recent weeks since the June debate with President Joe Biden and his survival of an assassination attempt over the weekend.