Small-cap stocks are having a moment. The Russell 2000 climbed 0.6% to 2,540 by midday Tuesday, notching fresh record highs as investors bet big on what's looking like an inevitable Federal Reserve rate cut at Wednesday's policy meeting.
And they're not just betting—they're practically certain. The CME FedWatch tool showed a 90% probability of a 25-basis-point cut, while Polymarket odds climbed even higher to 95%. That's about as close to a sure thing as markets get, and traders are positioning accordingly.
The rotation into rate-sensitive sectors was on full display. Small caps, which tend to benefit more from lower borrowing costs than their large-cap cousins, led the charge. But the real star of the day? Silver, which rocketed nearly 4% to $60.39 per ounce, hitting an all-time high and extending what's been an absolutely jaw-dropping run. With gains approaching 110% year-to-date, silver has claimed the crown as the world's best-performing major asset in 2024.
Gold wasn't shabby either, climbing 0.4% to around $4,210 per ounce and breaking a two-day losing streak. The precious metals miners followed suit, with the VanEck Gold Miners ETF (GDX) up 3.5% and the Global X Silver Miners ETF (SIL) jumping 4.3%.
The broader market participated in the rally, though with a bit less enthusiasm. The S&P 500 added 0.3% to 6,865, sitting tantalizingly close—less than a percentage point—from its own record highs. The Dow Jones Industrial Average gained 0.3%, while the Nasdaq 100 inched 0.2% higher to 25,700.
What's fueling all this optimism? For one thing, the labor market data that dropped Tuesday morning didn't disappoint. Job openings jumped to 7.67 million in October, topping expectations and calming nerves that the U.S. labor market might be cooling too quickly. It's the Goldilocks scenario the Fed wants to see: a labor market that's slowing but not collapsing, giving them room to cut rates without panicking about a recession.
Crypto Catches a Bid
The risk-on mood extended into crypto markets, where Bitcoin (BTC) climbed more than 4% above $94,000 and Ethereum (ETH) surged over 7%. The high-beta tokens got even more love, with Cardano (ADA) and Solana (SOL) posting high-single-digit gains.
Strategy Inc. (MSTR), the Bitcoin proxy stock, rallied more than 7% to reach a three-week high, reminding everyone that when crypto moves, the Bitcoin-hoarding company moves even harder.
Tuesday's Performance in Major U.S. Indices
| Major Indices | Price | % Change |
|---|---|---|
| Nasdaq 100 | 25,697.06 | +0.3% |
| S&P 500 | 6,865.00 | +0.3% |
| Dow Jones | 47,898.01 | +0.3% |
| Russell 2000 | 2,539.04 | +0.6% |
Sector Snapshot
Looking at the sector-specific moves, energy was the clear winner of the day. The Energy Select Sector SPDR Fund (XLE) outperformed with a 1.4% gain, while healthcare lagged behind with the Health Care Select Sector SPDR Fund (XLV) down 0.3%.
The Vanguard S&P 500 ETF (VOO) inched 0.3% higher to $630, while the SPDR Dow Jones Industrial Average (DIA) slipped 0.26% to $476.93. The tech-heavy Invesco QQQ Trust Series (QQQ) edged 0.2% higher to $625.14, and the iShares Russell 2000 ETF (IWM) rose 0.6% to $252.59.
Russell 1000 – Top 5 Gainers
| Stock Name | % Change |
|---|---|
| Teleflex Incorporated (TFX) | +9.98% |
| Strategy Inc. (MSTR) | +7.68% |
| Ares Management Corp. (ARES) | +7.11% |
| Circle Internet Group Inc. (CRCL) | +5.75% |
| DocuSign, Inc. (DOCU) | +5.47% |
Russell 1000 – Top 5 Losers
| Stock Name | % Change |
|---|---|
| SLM Corporation (SLM) | -16.15% |
| AutoZone, Inc. (AZO) | -6.99% |
| Graphic Packaging Holding Co. (GPK) | -6.26% |
| Ferguson Enterprises (FERG) | -5.95% |
| Summit Therapeutics Inc. (SMMT) | -4.98% |
The top gainers told an interesting story. Teleflex Incorporated (TFX) led the pack with a nearly 10% jump, while DocuSign (DOCU) climbed 5.47%. On the losing side, SLM Corporation (SLM) got hammered with a 16% drop, and AutoZone (AZO) fell nearly 7%.
With the Fed decision just hours away, Wednesday's meeting will either validate this positioning or send traders scrambling. But for now, the market is trading like the cut is a done deal, and small caps and precious metals are reaping the rewards.
