Small-cap stocks like those in the Russell 2000 often catch a tailwind when central banks start cutting rates. Here's why: as borrowing costs drop, companies with high leverage benefit immediately, and retail investors feel emboldened to chase higher-risk positions. You see it every cycle—cheaper money flows into speculative plays. The margin requirement pressure eases, trading volume picks up, and momentum builds. It's not guaranteed, but historically the timing has favored small-cap rallies during these easing windows.