1. Markets anticipate Fed rate cut due to weak jobs report. 2. 90.4% probability of 25-bp cut at September meeting. 3. FOMC held rates steady, inflation remains above 2% target. 4. July jobs report showed only 73,000 jobs added, below estimate. 5. PCE inflation increased, dampening rate cut expectations later.
Historically, rate cuts generally lead to increased market optimism and asset prices. For instance, after the Fed cut rates in 2019, the S&P 500 experienced significant gains.
The likelihood of a rate cut is significant enough to sway S&P 500 movements, especially with jobs data influencing monetary policy.
Expectations for the Fed cutting rates in September could quickly influence market sentiment and lead to short-term market rallies, much like previous Fed rate decisions.