The Russell 2000 index hit a record high on Monday, buoyed by expectations for tax cuts under President Donald Trump’s second administration and optimism about further rate cuts from the Federal Reserve.

The index represents the performance of approximately 2,000 small-cap companies in the United States. It’s a subset of the Russell 3000 index, which includes the 3,000 largest companies in the United States by market cap.

In intraday trading, the index reached 2,466.39 points, surpassing the previous record high of 2,437.08 set in November 2021. At market close, the index was 2,422.03 points, up 1.47%, and over the past year, the index has gained 35.58%.

Since the Federal Reserve began monetary easing in September, small-cap stocks have received a lot of attention as lower borrowing costs are expected to disproportionately benefit small businesses. Since the Nov. 5 U.S. presidential election, the Russell 2000 Index has risen more than 8%, reflecting investor confidence in policy changes favorable to deregulation and lower tax burdens.

In comparison, the S&P 500 is up 31.58% over the past year and 3.5% since November 5th.

Analysts say small-cap companies are often more domestically oriented and stand to benefit from economic policies proposed by President Trump, such as import tariffs and looser regulations.