For months now, Wall Street’s biggest story has been Big Tech’s dominance. The likes of Nvidia, Apple, and Microsoft have carried the market on their backs, leaving smaller companies in the shadows.

But Tuesday’s trading session told a different story, one that could mark the beginning of a long-awaited rotation into small-cap stocks.

The Russell 2000, the benchmark index for small-cap companies, gained 0.8%, outpacing the more modest moves in the S&P 500 and Nasdaq. Even more telling, the S&P Equal-Weighted Index, which gives each company the same weight instead of letting megacaps dominate, surged 2%.

That means the rally wasn’t just about the usual suspects in Silicon Valley, it was broad-based, reaching into the overlooked corners of the market.

This matters because small-cap stocks are often considered a barometer of the U.S. economy. They’re more domestically focused, more sensitive to changes in interest rates, and more dependent on consumer strength than multinational giants. When small caps start moving, it usually signals that investors see real growth potential across the wider economy, not just in a handful of trillion-dollar companies.

Adding a little more optimism to the market was news from Boeing, which announced plans to sell 103 airplanes to Korean Air Lines. The deal sent Boeing’s stock higher and reinforced the idea that industrials and cyclicals, not just flashy tech stocks, have room to run in this environment.

Where’s the sudden love for small and midcap stocks coming from? A lot of it comes down to interest rate expectations. With inflation cooling and the Federal Reserve widely expected to cut rates later this year, smaller companies, who tend to borrow more heavily and benefit most from cheaper credit stand to gain. Investors are positioning early, betting that the Russell 2000 could become one of the biggest winners of a rate-cut cycle.

But here’s where it gets interesting: small caps are cheap compared to large caps.

After years of underperformance, valuations have been beaten down to some of the steepest discounts in decades. That means if money keeps rotating out of mega-cap tech and into broader market plays, small-cap stocks could rally hard.

Of course, it’s not without risk. Small-cap companies tend to be more volatile, more sensitive to economic shocks, and more exposed to downturns.

But for investors looking for growth potential in a market that’s felt increasingly one-sided, the Russell 2000’s outperformance is a sign that the tide may finally be turning.

In short: August 26th’s  trading wasn’t just another good day on Wall Street. It was a signal that the rally is broadening, and if the Fed follows through with rate cuts, small-cap stocks might just be the next big story of 2025.