Russell 2000 hits record high on Trump policy, Fed rate-cut optimism

(Reuters) – The Russell 2000 index tracking small cap companies in the U.S. hit a record high on Monday, boosted by expectations of tax cuts under a second Donald Trump administration, along with the prospect of lower borrowing costs. The index hit an all-time high of 2,458.9913 and was last up 2.1%, eclipsing the previous high it touched three years ago. The index has gained more than 8% since the Nov. 5 U.S. presidential election. Expectations that Trump, along with a Republican Congress, can make good on his promise of lower taxes, import tariff hikes and less rigid regulations have been the latest tailwinds for this group of stocks.

Small cap companies have been in the spotlight since the U.S. Federal Reserve commenced its monetary policy easing cycle in September, as investors expect them to perform better in a low-interest-rate environment.