1. The Fed convenes amidst internal divisions on rate cuts. 2. Current rates are between 3.75% to 4% as of now. 3. Inflation rose to 3% in September, unemployment increased to 4.4%. 4. Market expects a possible third rate cut amid uncertainties. 5. Potential Fed chair Kevin Hassett advocates for more rate cuts.
FAQ
Why Bullish?
A potential rate cut typically supports S&P 500 growth by reducing borrowing costs, which can stimulate investment and consumer spending, fostering corporate profitability. Historically, rate cuts lead to increased market optimism, as seen in previous easing cycles in 2015 and 2019 when S&P 500 showed strong positive performance.
How important is it?
The Fed's decision affects market liquidity and economic outlook, directly influencing S&P 500 performance. Given that many large-cap companies in the index are sensitive to changes in interest rates, any decision on rates carries considerable weight.
Why Short Term?
The upcoming FOMC meeting's decision on rates will likely have immediate effects in the next few trading sessions, influencing market sentiment and trading volume on the S&P 500 in the near term, similar to the immediate effects observed in previous rate decision announcements.