ZACKS·2025-12-12 02:26Core Viewpoint - The Russell 2000 index is positioned to potentially be the second-best-performing index in the U.S. stock exchanges as 2025 approaches, driven by a significant shift towards small-cap stocks due to the Federal Reserve's easing cycle [1]. Interest Rate Impact - The Federal Reserve has reduced the benchmark federal funds rate by 25 basis points, bringing it to a range of 3.5-3.75%, down from a high of 5.25-5.5% in 2023 during a tightening cycle aimed at controlling post-pandemic inflation [2]. Small Business Financing - Lower interest rates are favorable for small businesses, particularly as the period from mid-December to early March is historically strong for the Russell 2000 due to tax-loss harvesting and increased investor risk appetite at the start of the new year [3]. Top Performers in Russell 2000 - Celcuity (CELC): - Stock Price: $100 - YTD Return: +695% - Market Cap: $4.71 billion - The company focuses on cellular analysis and precision oncology, experiencing significant stock price increases due to breakthrough clinical trials [5][6]. - Better Home & Finance (BETR): - Stock Price: $48 - YTD Return: +442% - Market Cap: $794.72 million - Operates as an AI-powered mortgage lender and fintech company, with projected annual sales growth of over 50% this year and 67% next year [9][12]. - Cogent Biosciences (COGT): - Stock Price: $40 - YTD Return: +413% - Market Cap: $5.58 billion - Focused on precision therapies for genetically defined diseases, with strong clinical progress on its lead drug, bezuclastinib [13][14]. Earnings Projections - Celcuity is expected to report a loss of -$3.86 per share in FY25 and -$4.05 in FY26, despite positive EPS revisions [8]. - Better Home's EPS revisions for FY25 and FY26 have slightly decreased, indicating potential short-term momentum loss [12]. - Cogent is projected to have a narrower adjusted loss of -$1.77 per share in FY26, with modestly higher EPS revisions in the last 60 days [14]. Investment Considerations - The strong performance of the Russell 2000 suggests that these top-performing stocks may be worth monitoring, although better buying opportunities may arise in the future [16].