The Federal Reserve's signaled shift toward lower interest rates in September 2025 is a critical catalyst. Small-cap companies, often reliant on floating-rate debt, face higher borrowing costs than large caps. With the CME FedWatch Tool indicating a 90% probability of another quarter-point cut in October 2025, small caps benefit from reduced financing costs and improved equity valuations. Lower rates decrease the discount rate on future cash flows, disproportionately boosting smaller firms with higher growt ...