History Says the Stock Market Will Make a Big Move Now That Interest Rates Are Falling

The Federal Reserve is charged with maintaining stable prices and maximum employment. Adjusting the target range on the federal funds rate is one tool policymakers use to accomplish that goal. The federal funds rate is a benchmark that impacts other interest rates across the economy. Higher rates discourage borrowing and slow the economy, and lower rates do the opposite.In 2022, the Fed began an aggressive rate-hiking cycle to curb the runaway inflation triggered indirectly by the pandemic. Policymakers ultimately pushed the benchmark rate to its highest level in two decades. However, they reversed their stance in September 2024 in response to cooling inflation and a softening labor market.The Fed announced a half-percentage-point rate cut on Sept. 18, marking the first cut since 2020. The S&P 500 (SNPINDEX: ^GSPC) has already jumped about 2% on the news, but history says the stock market could move much higher over the next year.Continue readingWeiter zum vollständigen Artikel bei MotleyFool Weiter zum vollständigen Artikel bei MotleyFool