Interest-Rate Anxiety No Deterrent to Money-Making Small Caps

A rally in small-cap stocks has petered out on concerns that interest-rate cuts won’t come fast or deep enough for the heavily indebted companies.

The Russell 2000 Index has dropped every day so far in September after a 7% gain in August, its best month this year. Uncertainty over a breakout in the 30-year Treasury yield toward 5% took a toll on small-cap sentiment by promising to keep bond-market rates high, regardless of what the Federal Reserve does. So did concern that the central bank may go into pause mode again even if it eases policy this month, given the uncertainty around the US economy.