Invesco NASDAQ Future Gen 200 ETF

QQQS

Market cap $10.8M

One day doesn't make a trend. But it's hard to ignore the effect Fed Chair Powell's comments made last Friday had on equities, particularly small-caps.

Small-cap stocks and ETFs appear to be finding solid footing. That's an arguably surprising scenario given the reputation of summer months being trying for equities.

Look now, because small-cap stocks and relevant ETFs are having their long-awaited moments. Following a one-month gain of more than 6%, the Russell 2000 Index is higher by nearly 9.30% for the 90 days ending July 1.

In an extension of a long-running theme, biotechnology stocks are disappointing investors again in 2025. Large-cap gauges addressing the industry have performed mostly in line with the S&P 500.

There's roughly 10 months left in 2025. That's ample time for small-caps stocks and related ETFs to potentially deliver on long-awaited outperformance of large-caps counterparts.

ETF issuance is profitable for Wall Street, leading to an overwhelming number of ETFs that may not serve investors' best interests. Avoid ETFs with less than $100 million in assets due to inadequate liquidity and higher trading costs. Invest in ETFs with total annual costs below 0.49% to ensure low fees; high fees don't guarantee quality.

Some market participants were enthusiastic about President Trump's return to the White House. One reason was the notion that the regulatory environment in Corporate America would become more hospitable.

Small-caps momentum seemingly waned as quickly as it arrived. But some market observers believe smaller stocks are poised to regain their bullishness.

Uncertainty remains the only certainty as 2025 approaches in the form of Trump and Fed policies.

Once stalwarts of the healthcare investing realm, biotechnology stocks and related ETFs have been laggards going back to 2021. That's a lengthy run of disappointment that's given some investors pause about embracing the space.