The S&P 500 Is at a Record. One Bear Sees a 10% Drop. — Barrons.com

Dow Jones Newswires

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Fed's Waller Sees More Rate Cuts, Inflation Below 2%, and a Strong Economy Ahead — Barrons.com

Dow Jones Newswires

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Small-cap stocks post longest rally since 2021 after Fed rate cut. What's next?

MarketWatch

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U.S. Inflation Expectations Could Rise Fast — Market Talk

Dow Jones Newswires

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FTSE 100 Index Ends the Week 0.52% Lower at 8229.99 — Data Talk

Dow Jones Newswires

The FTSE 100 Index is down 43.10 points or 0.52% this week to 8229.99

Down two of the past three weeks
Today it is down 98.73 points or 1.19%
Largest one day point and percentage decline since Monday, Aug. 5, 2024
Down two of the past three trading days
Off 2.56% from its record close of 8445.80 hit Wednesday, May 15, 2024
Up 29.85% since the pre-Brexit vote level of 6338.10 hit Thursday, June 23, 2016
Lowest closing value since Wednesday, Sept. 11, 2024
Off 2.56% from its 52-week high of 8445.80 hit Wednesday, May 15, 2024
Up 12.87% from its 52-week low of 7291.28 hit Friday, Oct. 27, 2023
Rose 7.11% from 52 weeks ago
Off 2.56% from its 2024 closing high of 8445.80 hit Wednesday, May 15, 2024
Up 10.52% from its 2024 closing low of 7446.29 hit Wednesday, Jan. 17, 2024
Month-to-date it is down 1.75%
Year-to-date it is up 496.75 points or 6.42%

Source: Dow Jones Market Data, FactSet

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STOXX Europe 600 Index Ends the Week 0.33% Lower at 514.26 — Data Talk

Dow Jones Newswires

The STOXX Europe 600 Index is down 1.69 points or 0.33% this week to 514.26

Down two of the past three weeks
Today it is down 7.41 points or 1.42%
Largest one day point and percentage decline since Monday, Aug. 5, 2024
Down two of the past three trading days
Off 2.06% from its record close of 525.05 hit Friday, Aug. 30, 2024
Lowest closing value since Thursday, Sept. 12, 2024
Off 2.06% from its 52-week high of 525.05 hit Friday, Aug. 30, 2024
Up 19.71% from its 52-week low of 429.58 hit Friday, Oct. 27, 2023
Rose 13.46% from 52 weeks ago
Off 2.06% from its 2024 closing high of 525.05 hit Friday, Aug. 30, 2024
Up 9.95% from its 2024 closing low of 467.71 hit Wednesday, Jan. 17, 2024
Month-to-date it is down 2.06%
Year-to-date it is up 35.27 points or 7.36%

Source: Dow Jones Market Data, FactSet

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Fed Cut Rates by 50 Basis Points

Leverage Shares

18 September 2007, 50 bps rate cuts

18 September 2024, 50 bps rate cuts

After the most aggressive tightening cycle in 40 years and the second-longest pause in history with rates in negative territory, the Fed cut its policy rate for the first time in four years.

However, does that half percentage point trim signal problems?

Historically, the Fed began initiating 50 basis points three times, in early 2001 and 2007 and 2020

Stock markets were sliding as the tech bubble began to deflate with the Fed cut rates in January 2001 by 50 basis points. The bursting of a subprime mortgage-credit bubble in August 2007 preceded the Fed’s cut of the same magnitude in September 2007.

And of course at the onset of the COVID-19 pandemic in March 2020 Fed also cut by 0.5% to save the economy of markets from total collapse.

Source: pin point macro

All this has led market participants to think there might be some truth to that statement.

The parallels are there.

Markets initially went higher, just like they did yesterday, cheering on the big rate cut, but over the next months experienced deep declines.

In 2001, S&P500 was down 16% post the 1st rate cut, while in 2007 it was nearly double that at a negative 27%.

During the Dot.com bubble, the market fell 31% after 2 years and in 2007 during the “Great financial crisis” the market fell 26% after 2 years.

Another critical factor is the state of the economy.

Here is a chart that shows how the S&P 500 does when the Fed cuts in a non-recession period (black line) vs. a recession period (green line).

Massive difference!

Source: HSBC

It all depends on if we get the soft landing (no-recession) or hard landing (recession) scenario.

And your timeframe. Initially, markets seem to rejoice about the rate cuts, but they follow a rude awakening, especially when the economy starts heading south.

Will history repeat itself, or is this time different?

Investors can long S&P 500 using our 5x S&P 500.

Alternatively, traders can short the S&P 500 using our -5x S&P 500.

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The S&P 500 Is at a Record. One Bear Sees a 10% Drop. — Barrons.com

Fed's Waller Sees More Rate Cuts, Inflation Below 2%, and a Strong Economy Ahead — Barrons.com

Small-cap stocks post longest rally since 2021 after Fed rate cut. What's next?

U.S. Inflation Expectations Could Rise Fast — Market Talk

FTSE 100 Index Ends the Week 0.52% Lower at 8229.99 — Data Talk

STOXX Europe 600 Index Ends the Week 0.33% Lower at 514.26 — Data Talk

Fed Cut Rates by 50 Basis Points

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