Small-Cap Stocks Face Interest Rate Uncertainty

Small-cap stocks experience heightened volatility amid uncertainty over interest rates

Small-cap stocks in the US have recently experienced a significant increase in volatility, reflecting their dependence on interest rates. The year started off on a lackluster note for small-cap stocks, but this was quickly followed by a surge in volatility triggered by uncertainty surrounding the Federal Reserve's decision on interest rates. This uncertainty has been fueled by mixed inflation data in January. The Russell 2000 index, which tracks small-cap stocks, has witnessed its most prolonged movement streak since March 2023, indicating a period of heightened activity in the market.