Stocks surged on Friday following Federal Reserve Chair Jerome Powell’s hint at a potential interest rate cut in September. Small caps, homebuilders, and construction suppliers led the rally. The Dow Jones hit a record high, with companies like Caterpillar and Goldman Sachs benefiting from lower rates. Homebuilders like Pultegroup and D.R. Horton also saw significant gains in anticipation of increased homebuying activity. Small-cap stocks are expected to benefit the most from rate cuts, historically outperforming large caps during recessions. If economic conditions remain stable, small caps could see a significant boost from future rate cuts.

Read more at Yahoo Finance: Here Are The Stocks That Are Likely To Benefit From Lower Interest Rates