History Suggests Fed Rate Cuts May Be Bearish For Stocks Legacy Investors care more about what fed rate cuts say about the economy, history shows last updated: aug. 27, 2024 at 7:53 a.m. et first published: aug. 27, 2024 at 7:00 a.m. et share. Source: dow jones market data, factset, st. louis fed. on average, the s&p 500 was up 2.5% three months after the first cut. but that average belies rocky reactions to rate cuts in 2001 and 2007.
History Suggests Fed Rate Cuts May Be Bearish For Stocks Legacy Though this rate cutting began on sept. 18, 2007, the stock market didn't bottom out until march 9, 2009, or 538 calendar days later. the fed, once again, began cutting its federal funds target. The market has long obsessed over interest rates, and this week, they're firmly in focus. it's still unclear whether the federal reserve will reduce rates by a quarter or half point. bmo capital. It's often said that the fed takes the stairs up and the elevator down in an interest rate cycle, meaning it raises rates gradually—step by step—and cuts them quickly when a threat to the economy emerges. so far, the current cycle has done the opposite. the rate hikes from march 2022 to july 2023 came fast and furious. Through wednesday's close, the s&p 500 spx was up just 0.1% since dec. 20. after that first rate cut, however, stocks have tended to rally over the next six to seven months, with the s&p 500.
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