US cuts interest rates despite inflation risk

The rate cut could stimulate economic activity, especially in sectors sensitive to borrowing costs such as real estate and consumer discretionary spending. This may lead to increased consumer spending, which often drives stock prices higher.

Conversely, continued inflation concerns might make investors cautious about long-term investments in equities due to potential future rate hikes. Sectors like utilities may see a negative reaction as their high dividends look less attractive in a rising interest environment.