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Wall Street’s Big Surprise: Why Small Caps Are Suddenly Winning

Navigating rate cuts and tech surges. September 19, 2025
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The Fed's latest move is front-page news with market ripples in tow. All eyes on the chart: small caps surge to historic highs.

Good Morning,

Small-cap stocks are stealing the spotlight, with the Russell 2000 notching a record close for the first time in years. We break down what fueled the surge, why it signals a shift in market leadership, and what it could mean for portfolios beyond the usual tech and AI winners.

Meanwhile, Intel gets a $5 billion shot in the arm from Nvidia, a tech lifeline that’s spiking shares but not erasing deeper doubts.

Also, yesterday's answer from trivia will surprise a majority of you. How will you do with today's?

Here are your Morning Bullets.

– Truly yours, Fred Frost

📉 Yesterday's Market Recap

Markets took a cautious step back yesterday as mixed earnings reports and geopolitical noise kept investors on edge. Cracker Barrel's disappointing Q4 numbers dragged consumer stocks, while defense contracts boosted select industrials. Uncertainty over healthcare subsidies added to the gloom.


  • Cracker Barrel Slumps on Q4 Miss: Stock dropped 10% after-hours as weak customer traffic and activist pressure compounded woes. → Fortune

  • Raytheon Secures Navy Deals: Two contracts worth over $436M for missile systems lifted defense sector sentiment. → Seeking Alpha

  • Reddit Stock Surges on Upgrades: Wall Street raised price targets, driving a 4% gain on growth optimism. → Stocktwits

📈 Daily Performance Snapshot

Index/Asset Closing Value Change
S&P 500 6,631.96 +0.48%
Nasdaq 22,470.73 +0.94%
Dow Jones 46,142.42 +0.27%
Gold $3687.50 +0.25%
Crude Oil $63.24 -0.52%
Bitcoin $116,569 -0.59%
10-yr Treasury Yield 4.104% +0.69%

🔭 What to Watch Today

Today’s calendar brings events that could ripple through markets, from high-level trade talks to earnings previews. Keep an eye on these developments for potential shifts in sentiment.

  • Trump-Xi Call on Tariffs: A critical discussion on U.S.-China trade tensions and TikTok’s fate could sway global markets. → Seeking Alpha
  • Worthington Enterprises Q1 Earnings (After Close, Tue 9/23): Expected EPS of 70 cents and revenue of $291.84M could signal industrial sector health. → Benzinga
  • Fed Speeches Post-Rate Cut: Further commentary from Fed officials may clarify the hawkish tone of this week’s cut. → Stocktwits

    • 💡 Opportunity Watch

    Amid policy shifts and tech breakthroughs, a few opportunities stand out for savvy investors looking to capitalize on the latest waves.

    • Intel (INTC): Nvidia’s $5B investment and partnership could reignite Intel’s AI market potential despite execution risks. → Seeking Alpha
    • Butterfly Network (BFLY): Stock jumped 15% after hours on health tech recognition, hinting at recovery potential despite YTD losses. → Benzinga
    • AI Commerce Startups: Andreessen Horowitz sees untapped potential in AI-driven commerce solutions amid attribution challenges. → Fortune

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    🔥 The Big Bullet

    Small-caps notch a record as the Russell 2000 closes at an all-time high

    What happened: Smaller U.S. companies had a big day, with the Russell 2000 index closing at its highest level ever (first record close in four years). This move came after recent interest rate cuts, which made investors more willing to take on risk. Reports say the index jumped as traders bet that more cuts could come, helping businesses that rely on cheaper borrowing and local demand, per this summary of the record run and policy backdrop. Many industries tied to the economy saw more activity, while defensive stocks didn’t keep up. Larger stock indexes also climbed, helped by gains in tech and consumer companies. Overall, more stocks joined the rally, and the market stayed steady without much extra volatility.

    Why it matters: Small-cap stocks often show how strong the U.S. economy really is, since they depend more on local customers and loans. Their strength now may point to more trust in America’s growth outlook. This shift also makes the market rally feel broader and possibly longer lasting. At the same time, not everything looks smooth, mortgage rates have gone up, which can slow housing demand. Broad averages also finished higher on the day, as noted by major U.S. stock index results. Big daily moves in certain names show that not all parts of the market move together; single-stock stories drove notable swings, so careful selection still matters.

    What’s next: Key reports on jobs, inflation, and consumer spending will show if the economy is cooling without cracking. If the data support more rate cuts, small companies could get even more breathing room. Real estate and other rate sensitive groups may benefit; one outlook argues Fed cuts could help storage REITs turn the corner. But not all sectors are keeping up, medical device stocks continue to lag, showing leadership is uneven. Earnings updates and guidance from smaller firms will signal how strong demand really is. Credit markets will also matter, because small companies need affordable borrowing. Policy or trade headlines could shift the mood quickly, so staying balanced and patient is sensible.

    🧭 Policy & Market Ripples

    • Meta’s Smart Glasses Demo Flop: Zuckerberg’s live demo failures at Meta Connect 2025 raise doubts about AR tech readiness, stock may feel pressure. → Fortune
    • TikTok Ownership Deal Nears: U.S.-China negotiations on ByteDance divestment could resolve long-standing security concerns or spark new tensions. → Daily Signal
    • Trump’s Tariff-Funded Farmer Bailout: Administration eyes tariff revenue to aid farmers hit by trade policies and retaliatory tariffs. → Fortune

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    📜 This Day in History – September 19

    September 19 has witnessed astronomical naming, foundational political warnings, and legal precedents—all quiet but far‑reaching.

    Sepia sketch of astronomer observing an asteroid, or orbiting celestial body map

    1852 – (20) Massalia was discovered by Annibale de Gasparis, the first asteroid named outside mythological tradition, expanding astronomical classification.

    1796 – Washington’s Farewell Address was published, setting enduring norms in republican governance about public service, party conflict, and foreign entanglements.

    1857 – The asteroid (49) Pales was discovered—adding to the systematic mapping of the solar system’s smaller bodies.

    1797‑onwards – Washington’s precedent of stepping down after two terms and framing his retirement through the Farewell Address helped shape democratic norms around executive term limits.

    Yesterday, 46% of you chose the right answer to the trivia question: Government use of taxation and spending to influence the economy


    All I ask is the chance to prove that money can’t make me happy.
    – Spike Milligan
    Thanks for Reading.

    Do great things.
    Fredrick Frost
    Editor, MorningBullets

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