Artificial intelligence (AI) has dominated the stock market narrative since early 2023, but another storyline is gaining traction.

After enduring interest rates over 5% for more than a year, investors are looking forward to interest rates coming down, and are rotating into small-cap stocks to prepare for that move. While the Federal Reserve held interest rates steady in its rate decision on Wednesday, Fed Chair Jerome Powell opened the door to a rate cut at the next meeting in September.

He said the economy was making progress toward its goal of 2% inflation, and seemed to imply that the central bank would cut rates if the current trajectory continued. Stocks climbed higher in response to the news.

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Source Fool.com