Stock-market participants are mostly optimistic about smaller companies’ potential to continue to outpace the broader market in the months ahead — driven by the likelihood that the central bank will start lowering rates on Wednesday, as well as chances that the U.S. economy will achieve a so-called soft landing by slowing down without sliding into a recession.Small caps are typically more sensitive to moves in borrowing costs and economic conditions than large-cap companies, since they tend to have higher levels of debt than their larger peers and rely more on external financing to fund their operations.
