Small-cap stocks jump more than 2% after Fed delivers jumbo rate cut

Small-cap stocks jumped to their highest in more than a month Wednesday after the Federal Reserve made a big swing in its first interest rate cut since 2020 with a cut of 50 basis points.

The Russell 2000 (RTY) index of small-caps climbed 2.4% to 2,259.70 before paring the gain to 1.8%. The intraday level was the highest since August 1.

Small-caps were outperforming large-cap stocks following the rate cut, as small-cap companies have more floating-rate debt loans than larger businesses. The benchmark S&P 500 (SP500)(SPY)(IVV) pared a post-decision gain to +0.61% after hitting a new all-time intraday high earlier, at 5,689.75.

In the Russell 2000, Super Micro Computer (SMCI) picked up 2.4%, MicroStrategy (MSTR) rose 5.3% and Abercrombie & Fitch Co.(ANF) gained 3.5%.

“We made a good strong start to this (rate-cutting cycle), and that’s a sign of our confidence,” Federal Reserve Chair Jerome Powell said at his post-decision press conference on Wednesday.

UBS earlier highlighted 30 stocks that may be in a position to observe noticeable moves after a Fed rate cut.