Group 1 - The small-cap stocks have struggled in recent years compared to the S&P 500 and Nasdaq 100, but there are signs of a potential long-term bull market returning for these stocks as risk factors seem to be re-emerging [1][2] - The Russell 2000 index, a benchmark for small-cap stocks, last reached a historical high on November 8, 2021, and is currently only about 3% away from that level, marking the longest period without a new high since the dot-com bubble burst around 2000 [1][2] - Recent optimism in the market regarding potential interest rate cuts by the Federal Reserve has led to increased investment sentiment in small-cap stocks, which have outperformed the S&P 500 and Nasdaq in recent weeks [1][2] Group 2 - Bank of America indicates that recent economic data shows resilience in the U.S. economy, suggesting a "soft landing," and that small-cap stocks, particularly micro and small caps, are poised for structural opportunities [2][3] - The expectation of interest rate cuts is expected to benefit small-cap stocks significantly, as they are more sensitive to changes in the Fed's benchmark rates and rely heavily on floating-rate loans [2][3] Group 3 - The Russell 2000 index has risen 7.3% in August, leading the U.S. stock market, and is expected to gain further momentum with the anticipated interest rate cuts from the Federal Reserve [3][5] - Analysts believe that the potential for continued upward movement in small-cap stocks exists, especially as regional banks and small tech and industrial companies, which hold significant weight in the Russell 2000, may benefit from looser monetary policy [3][5] Group 4 - The iShares Russell 2000 ETF (IWM) is trading above $230, breaking a critical technical level, which is seen as a bullish signal for small-cap stocks [5][6] - There is a prevailing sentiment that small-cap stocks may outperform large-cap stocks and tech giants during the Fed's anticipated rate-cutting cycle, as many small-cap stocks remain undervalued compared to the high valuations of major tech companies [5][6] Group 5 - Despite the bullish outlook, some traders remain skeptical about the sustainability of the small-cap rally, with concerns that the performance of large tech stocks could influence the fate of small-cap stocks [7][8] - The market dynamics suggest that if large tech stocks maintain their upward trajectory, it could encourage a rotation of funds into small-cap stocks, but a decline in tech stock valuations could pose risks for small-cap performance [7][8] Group 6 - To capitalize on the potential breakout of the Russell 2000 index, professionals recommend buying call spreads on the IWM ETF, allowing investors to hedge while capturing some upside [8] - This strategy is seen as a way for cautious investors to engage with small-cap stocks without fully committing capital, especially after previous disappointments with false breakouts [8]