The Federal Reserve delivered its first rate cut in 2025. Will there be more to come before year-end?
Monday
S&P 500 0.47% | NASDAQ 0.94%
Markets were upbeat coming out of the weekend driving the NASDAQ and S&P 500 to record highs. The Federal Reserve begins its two-day meeting on Tuesday to discuss the path of interest rates. The U.S. and China held talks regarding trade and, specifically, tech enhancement, with hopes of a solution.
Tuesday
S&P 500 0.13% | NASDAQ 0.07%
Markets stabilized from Monday’s run with retail sales data providing a strong August reading. This ran contrary to recent trends in consumer sentiment. The 2’s and 10’s saw slightly lower interest rates on the day.
Wednesday
S&P 500 0.10% | NASDAQ 0.33%
Interest rate decision day came and largely met expectations. The federal reserve announced their long-awaited .25% interest rate cut. There was a boost in equities which later faded with value stocks standing out against growth. The last cut was seen in December 2024. Mortgage application data showed a surge of almost 30% last week.
Thursday
S&P 500 0.48% | NASDAQ 0.94%
Tech companies made a meaningful splash on Thursday as news spread of Nvidia buying into Intel. Both companies’ stock rose and record highs for all three major indexes followed. An investment such as this shows more demand requires co-development amongst major players.
Friday
S&P 500 0.49% | NASDAQ 0.94%
Markets pushed higher as the outlook grew strong on additional rate cuts through year-end. Tech investments ballooned as growth stocks extended their lead so far for the year.
Conclusion
S&P 500 1.22% | NASDAQ 2.21%
Markets have anticipated the outcome of this week’s Federal Rate Cut decision for months now. The decision to move forward with the first rate cut since December proved to satisfy investor sentiment. There were also notable decisions made in the tech space that drove tech weighted indexes higher. After any rate cut, forecasts begin shifting to how many will occur over the next 3-12 months. Dot Plot projections reflect where Federal Open Market Committee (FOMC) members expect interest rates to be in the near term. It is a data dependent exercise, and each member’s thoughts differ. This week’s rate cut decision came with only one dissent, showing consensus that a .25% rate cut was merited. The Federal Reserve has indicated that their mandate for a strong labor market remains top priority. The current Dot Plot indicates 2 more rate cuts before the end of the year and another in calendar year 2026. This, of course, will certainly be open-ended.
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