According to * Walter Bloomberg released market news, BMO Capital pointed out that the US stock market usually rises after the Federal Reserve starts to cut interest rates. Since 1982, in 10 interest rate reduction cycles, the S & P 500 index has recorded positive returns 8 times, with an average increase of 10.4% the following year. However, the specific increase varies widely, ranging from -23.9% to + 32.1%, depending on whether the rate cut prolongs the economic growth cycle or fails to prevent a recession.
BMO says the current backdrop is closer to those that bring positive returns: employment is still growing, GDP is above trend, and earnings on the S & P 500 are expected to grow at double-digit rates through 2026.
It argued that the debate over how much the Fed would cut interest rates "misses the point". Barring problems in the economy, US stocks remain in a bull market - although future gains are likely to be smaller given the strong rebound so far.
Bank of Montreal: U.S. stocks tend to rise after the Federal Reserve cuts interest rates
2025-09-12 12:17:35
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