50 Or 25 Bps Fed Rate Cut? Markets And Economists At Odds — What Does Steeper Reduction Mean For Investors?
Portfolio Pulse from Shanthi Rexaline
The Federal Reserve's upcoming rate decision has markets and economists divided, with betting markets favoring a 50 basis-point cut, while most economists expect a 25 bps cut. A steeper cut could signal economic trouble, potentially impacting various sectors differently. The SPDR S&P 500 ETF Trust (SPY) is closely watched as it tracks the S&P 500 Index, which historically reacts to rate cuts.
September 18, 2024 | 7:36 am
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The SPDR S&P 500 ETF Trust (SPY) is likely to be impacted by the Fed's rate decision. Historically, a 50 bps cut has led to a 1% decline in the S&P 500 leading up to the cut, with mixed sector performances. SPY has gained 19.2% YTD.
The SPDR S&P 500 ETF Trust (SPY) tracks the S&P 500 Index, which is historically affected by Fed rate cuts. A 50 bps cut has previously led to a 1% decline in the index, with varied sector performances. Given SPY's direct correlation with the S&P 500, it is likely to experience similar volatility.
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