As the Federal Reserve kicks off a long-awaited rate cutting cycle, some investors are wary that richly valued U.S. stocks may have already priced in the benefits of easier monetary policy, making it harder for markets to rise much further.

The Fed went big this week and delivered a 50-basis point rate cut, with more easing on the horizon. Small caps tend to outperform the most during easing cycles, especially when the economy manages to avoid falling into a recession.