Last Updated: Dec. 9, 2025 at 10:13 a.m. ETFirst Published: Dec. 9, 2025 at 8:30 a.m. ET
Wall Street has finally turned bullish on small-caps stocks — with the Russell 2000 index
recapturing record territory last week, helped along by optimism over the Federal Reserve’s interest-rate policy.
Yet recent increases in Treasury yields and a cooling outlook for the Fed’s monetary policy next year have been quietly tightening the screws on this popular corner of the equity market, where many companies in the group remain unprofitable.
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Why the record rally for small-cap stocks could run into a big problem in 2026
Last Updated:
First Published:
Wall Street has finally turned bullish on small-caps stocks — with the Russell 2000 index
recapturing record territory last week, helped along by optimism over the Federal Reserve’s interest-rate policy.
Yet recent increases in Treasury yields and a cooling outlook for the Fed’s monetary policy next year have been quietly tightening the screws on this popular corner of the equity market, where many companies in the group remain unprofitable.
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