The Federal Reserve cut rates 3 times in 2025. More rate cuts are going to happen, but less are forecasted in 2026.
Monday
S&P 500 0.35% | NASDAQ 0.14%
Big week ahead for job openings and an interest rate cut by the Federal Reserve (FRB) sent markets lower. The FRB sits down tomorrow to discuss slowing inflation and a softening labor market. All roads point to a third rate cut in as many meetings.
Tuesday
S&P 500 0.09% | NASDAQ 0.13%
A flat day for markets as expectations of possible dovish monetary policy come into view. 10-year treasuries moved higher as job openings (Sept) came in stronger than anticipated. Equity markets were mixed but volatility measures have dropped meaningfully since their quarterly peak around Thanksgiving.
Wednesday
S&P 500 0.67% | NASDAQ 0.33%
FRB decision day and rates were cut by .25%. Markets responded in favor of the news to get ahead of reduced borrowing costs. Bond yields, in turn, fell on the day (bond rates and prices move in opposite directions).
Thursday
S&P 500 0.21% | NASDAQ 0.25%
Jobs data revealed a higher figure for unemployment claims but those on unemployment fell, indicating that hiring still is happening. The S&P500 and Dow Jones Industrial climbed to record highs, building off Wednesday’s gains.
Friday
S&P 500 1.07% | NASDAQ 1.69%
The end of the week began to slide, giving up mid-week gains. Tech continues to be under the microscope as most large players fell on Friday on fears of slowing earnings. Chip developers were hit hardest.
Conclusion
S&P 500 0.63% | NASDAQ 1.62%
A week focused on news coming out of the Federal Reserve had its share of (record) highs and lows. The FRB announced that they would cut interest rates for the third consecutive time. Equity markets were initially satisfied but listened to the tone of the Federal Reserve for future clarity. The dot plot, which forecasts future rate cut projections, indicated only 1 cut possible in 2026. The total cuts since Sept 2024 (15 months) equate to 7 rate cuts or 1.75%. Markets are anticipating a slower downward rate path by the FRB at least through the first half of 2026.
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