S&P 500, Gold Strike All-Time Highs, Small Caps Rally After Fed Slashes Interest Rates For First Time In 4 Years (UPDATED)
Portfolio Pulse from Adam Eckert
The Federal Reserve cut interest rates by 0.5%, marking the first cut since March 2020, and setting the target fed funds rate between 4.75% and 5%. This decision led to a rise in the S&P 500 and gold prices, with various ETFs and stocks reacting differently. The SPDR S&P 500 (SPY) rose by 0.39%, while the Materials Select Sector SPDR Fund (XLB) showed strength, and the Energy Select Sector SPDR Fund (XLE) weakened. The SPDR Gold Trust (GLD) increased by 1.01%, and the Invesco QQQ Trust (QQQ) rose by 0.64%. Meanwhile, the iShares 20+ Year Treasury Bond ETF (TLT) fell by 0.39%.
September 18, 2024 | 6:32 pm
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NEGATIVE IMPACT
The iShares 20+ Year Treasury Bond ETF fell by 0.39% as bond yields adjusted to the Fed's rate cut.
Bond prices often fall when interest rates are cut, as yields adjust to the new rate environment.
CONFIDENCE 80
IMPORTANCE 50
RELEVANCE 60
NEGATIVE IMPACT
The Energy Select Sector SPDR Fund fell by 0.3% despite earlier gains, as the energy sector showed relative weakness post-Fed decision.
Energy stocks had performed well ahead of the Fed decision, but showed relative weakness after the rate cut, possibly due to profit-taking.
CONFIDENCE 75
IMPORTANCE 50
RELEVANCE 60
POSITIVE IMPACT
The SPDR Gold Trust increased by 1.01% as investors sought safe-haven assets following the Fed's rate cut.
Gold often benefits from lower interest rates as it becomes more attractive compared to interest-bearing assets.
CONFIDENCE 85
IMPORTANCE 60
RELEVANCE 70
POSITIVE IMPACT
The Invesco QQQ Trust rose by 0.64%, benefiting from the Fed's rate cut and positive sentiment in tech stocks.
Tech stocks, which are a significant component of QQQ, often benefit from lower interest rates, leading to a rise in the ETF.
CONFIDENCE 85
IMPORTANCE 60
RELEVANCE 70
POSITIVE IMPACT
The SPDR S&P 500 ETF rose by 0.39% following the Fed's rate cut, reflecting positive market sentiment.
The rate cut is generally seen as a positive for equities, leading to a rise in the SPY ETF, which tracks the S&P 500 index.
CONFIDENCE 90
IMPORTANCE 70
RELEVANCE 80
POSITIVE IMPACT
The Materials Select Sector SPDR Fund rose by 0.6%, showing strength following the Fed's rate cut.
The materials sector often benefits from lower interest rates, which can stimulate economic activity and demand for materials.
CONFIDENCE 80
IMPORTANCE 50
RELEVANCE 60