Small caps actually benefited the most from the Federal Reserve’s (Fed) Chair Jerome Powell verbal signals last Friday. Newswires all cheered with one voice echoing his “time has come” voice for the monetary policy to be adjusted, as well as financial Chef cook’s “the direction of travel is clear” complement, even though the main dish has been sauced with “depending on incoming data, the evolving outlook and the balance of risks” remarks concerning the point of timing and pace. Everybody feels these cooling condiments as just empty courtesies to avoid saying “yes, we will do it” loudly up front.

“We don't seek or welcome further labor market cooling,” Powell noted to smooth potential negative effects from the spicy 818,000 downward revision in US annual jobs statistics, the largest update since 2009. All in all, the broad Wall Street’s S&P 500 barometer failed to reset its all-time highs so far. Some leading megacaps like Microsoft or NVidia also stepped back from direct attempts of jumping above their historical peaks, which we do not consider as a bad luck. Background demand on bellwethers is so strong and stable, especially following the tech retracement in early August, that it’s now O.K. to see it is not influenced much with interest rate matters. This is just one more proof that the investing crowd loves AI-related stocks not only for the pure fact some people may have access to cheaper excessive money.

Fed Chair speech could not change much in the script for market leaders. Besides, megacaps quotes are high enough already in terms of the ever-lasting uptrend, while cash in both Dollars and Euros is still burning everybody’s hands. What happens when people are looking for alternatives, and the monetary climate hints to become one or two degrees more comfortable for businesses soon? The plan of making rates lower may cure smaller companies’ struggling against heightened costs in supply chains and cost-conscious customers.

With the U.S. central bankers seemingly ready to start cutting interest rates, iShares Russell 2000 ETF (IWM), being an indicator of broader hopes of skipping recession, climbed from nearly $215 to above $221 on the agenda, which added as much as 2.8% to its more than 2% gains on expectations one week before to contribute to the small caps index’ 10% recovery from its local lows of August. The pace of its current move is looking so good. Purchasing the deeper slice of Wall Street companies, in the form of the Russell 2000 index or its 10-times-cheaper and more affordable ETF shares, now is a smarter option compared to more bets on rising the S&P500 above 5,800. An extra step up in the S&P 500 may give another 5% or 7%, but the next stage of rising in the Russell 2000 may give 15% or even more, when targeting at potential updates in all-time highs between 250 and 260 points, in terms of the IWM tool.