NEW YORK Small-cap stocks benefited from a dovish lining to the U.S. Federal Reserve’s decision to raise interest rates this past week, yet strategists warn it will take more to make these pricey stocks outperform their larger brethren in the long haul.
The Fed on Wednesday raised rates by a quarter of a percentage point, as expected, yet did not flag any plan to accelerate the pace of monetary tightening. A less aggressive monetary policy may benefit small-caps, which tend to obtain hit harder as borrowing costs increase when rates rise.
Stocks in the small-cap space rallied after the Nov. 8 election that put Donald Trump in the White House as investors bet Trump’s plans to cut back on regulations & taxes would particularly assist small companies.
