Sep 17 in Stocks
Fed rate decision tomorrow
Seize this opportunity! It’s likely we’ll see stocks drop. This means they are on sale so we can buy them at a cheaper price.
Don’t keep letting these opportunities pass.
Explanation below:
Stocks are hovering near record highs as the market awaits the Federal Reserve’s rate decision, with traders divided on whether the Fed will cut rates by 25 or 50 basis points.
A surprise increase in U.S. retail sales has complicated expectations, leading to mixed reactions. While some investors expect a "risk-on" reaction if a larger cut happens, others fear a "sell the news" scenario due to concerns about overbought markets.
Analysts expect either a 25-basis-point cut or a 50-basis-point cut with forward guidance suggesting further easing. Treasury yields edged higher, and the U.S. dollar strengthened slightly.
My opinion:
Given that the market is near overbought territory, I think there is a high chance of a "sell the news" reaction, particularly if the Fed opts for the smaller 25-basis-point cut. While a 50-basis-point cut might initially spark a rally, concerns about labor market weakness and the possibility of the Fed signaling future aggressive rate cuts could make investors cautious. In the short term, growth stocks may see some gains, but broader equity markets might face volatility, especially if the Fed doesn't clearly dispel recession fears.
Remember, when the stock market dips, we buy.
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Fed rate decision tomorrow
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