just before the pandemic hit. Might be an indicator on where they plan to go with the rate hikes (and of course we know what happened in 2020 with the extreme shock to markets due to the pandemic)...
When the Fed cuts interest rate three times and pauses, it works out great for stocks, history shows
Published Wed, Oct 30 2019 2:29 PM EDT Updated Thu, Oct 31 20198:21 AM EDT
Maggie Fitzgerald
@mkmfitzgerald
The Federal Reserve just cut interest rates for the third time this year and said it will likely pause from here. That scenario is usually very good for stocks.
(snip)
The central bank’s decision Wednesday to lower the overnight lending rate to a target range of 1.50% to 1.75% marks the third rate cut since July, when the Fed lowered rates for the first time since the financial crisis. Powell has attributed the series of cuts to “the implications of global developments for the economic outlook as well as muted inflation pressures.”
(snip)
Between 1995 and 1996 and in 1998, the Alan Greenspan-led Fed cut interest rates three times and then stopped, in order to combat an economic downturn and sustain the expansion. In each of these cases the S&P 500 returned 24.76% and 19.39%, respectively, over the next year. “We’ve seen periods of economic slowdowns that had three consecutive 25 basis point cuts, most recently in the mid- and late 1990s,” said Ryan Detrick, LPL Financial senior market strategist. “The good news is the economy accelerated after the slowdowns and stocks did quite as well.”
(snip)
Historically, the danger for stocks is when the third cut is not the last and the Fed needs to jolt the economy further. In 2001 and 2007, during the dot-com bubble and the financial recession, the Fed cut interest rates three times and kept cutting in order to boost the economy. During those cutting cycles, the S&P 500 had dropped 12.64% and a stunning 42.37% one year later. So stock investors should be wishing that this is the last rate cut for a while.
https://www.cnbc.com/2019/10/30/when-the-fed-cuts-rate-three-times-and-pauses-history-shows-it-works-out-great-for-stocks.html
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