Small-Cap Stocks Rally but High Debt Costs Could Limit Further Gains
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Small-cap stocks have rallied recently but still face challenges like high debt costs that could limit further gains.
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The Russell 2000 small-cap index has failed to sustain a bull market rally multiple times in the past 18 months.
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Small caps are more vulnerable to economic downturns and upcoming debt refinancing cycles than large caps.
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Valuations for small caps are cheap but technical and macro hurdles remain before a decisive breakout.
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Investors are still cautious on fully embracing the small-cap recovery despite some renewed inflows.