The Fed even forecast three interest rate cuts in 2024 as it gets closer to achieving the "soft landing" it's been aiming for, meaning bringing down inflation without causing a recession. As investors prepare for interest rates to come down next year and grow confident that the economy will avoid a recession, small-caps stocks are starting to beat large caps. Smaller companies have less access to capital, often have weaker balance sheets, and are more likely to feel the impact of a recession, which could mean bankruptcy for some small caps.