US small caps struggle as elevated interest rates take a toll

NEW YORK - The prospect of interest rates remaining elevated as the Federal Reserve battles inflation is further clouding the outlook for shares of smaller U.S. companies, which have lagged broader markets this year.

"Investors are skeptical right now about small cap stocks because of higher rates and stickier inflation, and they need greater clarity that the Fed will be cutting rates this year before moving in," said Michael Arone, Chief Investment Strategist for State Street’s SPDR Business, who has been buying small caps in anticipation of rate cuts later in the year.

Futures markets on Friday showed investors pricing in around 45 basis points of interest rate cuts this year, from less than 30 priced in earlier this week. That remained far lower than the 150 points they had priced in January. Among the notable small cap companies reporting in the week ahead are nutrition company Bellring Brands, gambling company Light & Wonder and oil and

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