US small caps show resilience amid rising borrowing costs

US small caps: US small-cap stocks represent shares of relatively smaller publicly traded American companies, often with greater sensitivity to borrowing costs and domestic economic conditions than large-cap firms. They are relevant to the news because resilient economic momentum is strengthening the investment case for these stocks even as elevated yields and financing costs have recently pressured them. Economic backdrop: Recent market commentary describes the US economy as resilient, with continued growth and healthy underlying activity supporting the case for economically sensitive stocks. Market sensitivity: Small-cap companies are generally more exposed to higher interest rates because they rely more heavily on borrowing and tend to have less diversified businesses than larger companies. Investor positioning: Small-cap equities have recently lagged larger technology-focused stocks as rising Treasury yields increased pressure on rate-sensitive companies.