As the Federal Open Market Committee (FOMC) prepares to meet next week, economists are forming their customary predictions about interest rate hikes. Investors see an 80.1% probability of a rate hike following the December 19 meeting, according to financial market company CME Group. Fears of higher interest rates, economic slowdown, and trade concerns have been causing the broader markets to dip since the beginning of the fourth quarter.

The following chart shows the comparative performance of the three major U.S. stock indexes since the start of the fourth quarter. The Russell 2000 (a small-cap stock market index) was hit the hardest: It is down 17% since it hit its all-time high on August 31. It closed on Tuesday (12/11) at its lowest level since September 2017. This is exceptionally close to bear market territory, defined as a 20% drawdown from a peak.

Amid trade concerns, investors were seeking to place their money in small-cap stocks earlier this year. According to The Wall Street Journal, these domestic-based companies grew on bets that they would not be as affected by tariffs, as well as corporate tax cuts expanding company profits. Now, talks of a slowing economy have been a contributing factor to the drawdown of the Russell 2000. CNBC states that GDP growth will slow as the trade deficit widens. As the U.S. dollar continues to strengthen this year, consumer goods imports have hit record highs and exports have plunged.

Also of concern to investors is the Fed’s quantitative tightening program (shrinking of its balance sheet), which began in June 2017. According to MarketWatch, in October, the program “hit its full stride, with the central bank allowing $50 billion each month in government debt and mortgage bonds to come off its books, thus reducing the demand for these assets and contributing upward pressure on long-term interest rates.”

Additionally, the Goldman Sachs Financial Conditions Index has risen by approximately 80 basis points since October, now at its highest level in two years. However, the index does show that conditions are loose compared to historic standards.

These quantitative tightening decisions tend to have an impact on small-cap firms, as they are generally more reliant on debt. As interest rates rise, so does the cost of borrowing. Assuming small-cap firms borrow at the same rate, their earnings will decline as the rates gradually hike in 2019.

As the Fed’s decision is revealed and negotiations with China continue, we will get a clearer picture of the impact on the economic outlook of small-cap stocks.

Sectors: The average momentum score for the Sector Benchmark ETFs declined from -30.82 to -42.09 last week. Concerns over the trade war and other economic issues loomed, causing the market to get battered. Only one of the 11 sectors tracked—Utilities (up 5 points)—was positive for the week. Utilities remained the top sector, followed by Real Estate and Consumer Staples, both of which declined last week. Energy and Technology swapped positions at the bottom of the rankings. Pressure continues to mount on what has so far been one of the worst Decembers for the market in years.

Factors: Among the Factor Benchmark ETFs, the average factor score decreased from -37.67 to -50.17. Yield remains in the top spot, followed by Low Volatility. Factors fell wholesale this past week amid poor broad market performance. We may be seeing a brief rally in Wednesday (12/12) trading, but the dominant trends are all still negative. Growth and Small Size are still among the bottom of the ranks, as small-cap stocks have largely underperformed large caps in recent months.

Global: The average Global Benchmark ETF momentum score decreased this week from -37.00 to -50.45. Momentum scores for all of the geographical regions fell last week, signaling continued negative pressure on global markets. The top three spots remained the same, as Pacific x-Japan and Emerging Markets continued to be favorable to developed market equities. The Eurozone and UK share the bottom spot. Brexit and slowing economic growth have been dominant factors in Europe of late.