Stocks Plunge as Fed Forecasts Fewer Rate Cuts Next Year

Published On Dec 18, 2024, 4:06 PM

The Federal Reserve has cut interest rates for the third time this year but raised its forecasts for future economic growth, leading to a sharp decline in stocks. The S&P 500 fell 3%, the Russell 2000 dropped more than 4%, and the Dow Jones faced its longest losing streak since 1974. Investors are cautious due to the Fed's hawkish tone regarding inflation risks and a potential slowdown in future rate cuts. The U.S. dollar strengthened, reflecting economic resilience compared to other economies.

Read full article

Stock Forecasts

SPYView SPY chart on TradingView

Negative

Given the interest rate cut paired with a hawkish outlook, the potential for economic growth could be disrupted, affecting corporate profitability and investor sentiment negatively. This could result in continued volatility in the stock market.

TLTView TLT chart on TradingView

Positive

The rising yields in government bonds may attract investors, suggesting a rotation from stocks to safer investments. The strengthened U.S. dollar could also pose challenges to multinational companies.

Related News

Fed cuts by a quarter point, indicates fewer reductions ahead

Dec 18, 2024, 2:00 PM

The Federal Reserve on Wednesday announced its decision on interest rates.

SPY

Federal Reserve cuts interest rates by quarter-point in December

Dec 18, 2024, 2:01 PM

The Federal Reserve's policymakers announced that they will cut the benchmark federal funds rate by a quarter point in December, marking the central bank's third straight cut.

SPY

Fed cuts rates by quarter point, scales back cuts for 2025

Dec 18, 2024, 2:01 PM

The Federal Reserve reduced interest rates by a quarter percentage point Wednesday and scaled back the number of cuts it expects to make next year.

SPY
XLF