What just happened?
The Fed cut interest rates by 25 basis points which is exactly what 97% of market participants wanted.
But, the S&P 500 just posted its largest post-Fed drop since March 2020, erasing $1.8 TRILLION of market cap.
Going into the Fed decision, there was a 97% chance of the Fed cutting interest rates by 25 basis points.
Their 25 basis point cut marked 100 basis points of cuts in 2024, "continuing" the Fed pivot.
However, markets price-in Fed decisions well before they are announced.
In reality, today's market reaction had NOTHING to do with the rate decision.
Rather, it would about the Fed's outlook for 2025 which shifted SHARPLY in the hawkish direction.
As seen below, the Fed revised their 2025 outlook from 3 rate cuts to 2 rate cuts, a total of 50 bps.
The Fed cut interest rates by 25 basis points which is exactly what 97% of market participants wanted.
But, the S&P 500 just posted its largest post-Fed drop since March 2020, erasing $1.8 TRILLION of market cap.
Going into the Fed decision, there was a 97% chance of the Fed cutting interest rates by 25 basis points.
Their 25 basis point cut marked 100 basis points of cuts in 2024, "continuing" the Fed pivot.
However, markets price-in Fed decisions well before they are announced.
In reality, today's market reaction had NOTHING to do with the rate decision.
Rather, it would about the Fed's outlook for 2025 which shifted SHARPLY in the hawkish direction.
As seen below, the Fed revised their 2025 outlook from 3 rate cuts to 2 rate cuts, a total of 50 bps.