Wall Street is betting the Fed will deliver a final 2024 rate cut and get more cautious about 2025

Published On Dec 18, 2024, 7:57 AM

Wall Street expects the Federal Reserve to implement a final 25-basis-point rate cut in December 2024, following indications of stronger economic growth and inflation. However, there is uncertainty about the Fed's outlook for 2025, with projections possibly being revised down for the number of rate cuts expected next year due to recent inflation data. The discussion around the 'dot plot,' which outlines Fed officials' projections for interest rates, will be critical during the upcoming announcements and press conference.

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Stock Forecasts

SPYView SPY chart on TradingView

Positive

The anticipation of a rate cut could lead to a positive market response, benefiting growth-focused stocks, especially in technology and consumer discretionary sectors. However, the potential revision in the Fed's expected pace of future cuts may create mixed signals among investors, leading to volatility.

XLFView XLF chart on TradingView

Negative

A cautious outlook from the Fed may dampen investor confidence, particularly if inflation persists, potentially putting pressure on interest-rate sensitive sectors such as real estate and utilities.

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