Interest Rates In Free-Fall: What It Means For Mortgages, Credit Cards And Your Wallet As The Federal Reserve Springs Into Action For First Time In 4 Years
Portfolio Pulse from Chris Katje
The Federal Reserve has cut interest rates by 50 basis points, marking the first reduction in over four years. This move is expected to lower mortgage, credit card, and auto loan rates, potentially boosting consumer spending and home purchases. However, it may also lead to a decline in the US Dollar's value and lower returns on savings and treasuries. The iShares Russell 2000 ETF (IWM) is outperforming the SPDR S&P 500 ETF Trust (SPY) as small-cap stocks benefit from the rate cut.
September 18, 2024 | 8:28 pm
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NEUTRAL IMPACT
The SPDR S&P 500 ETF Trust (SPY) is underperforming compared to IWM following the Fed's rate cut, as small-cap stocks are expected to benefit more from the lower rates.
While SPY is affected by the overall market conditions, the focus on small-cap stocks due to the rate cut has led to IWM outperforming SPY.
CONFIDENCE 85
IMPORTANCE 50
RELEVANCE 60
POSITIVE IMPACT
The iShares Russell 2000 ETF (IWM) is benefiting from the Fed's interest rate cut, as small-cap stocks are expected to perform well with easier borrowing conditions.
The Fed's rate cut makes borrowing cheaper, which is advantageous for small-cap companies that rely on loans for growth. This has led to a positive impact on IWM, which tracks small-cap stocks.
CONFIDENCE 90
IMPORTANCE 70
RELEVANCE 80