Rate cuts are on the way, but what does this mean for stocks?
Over the last 70 years, large-cap and small-cap stocks returned +15.6% and +26.6% on average within 12 months from the first rate cut.
Within 6 months of the first rate cut, large caps gained +9.4% and small caps gained +14.2% on average.
On the other hand, when a recession occurred in 2007, performance was significantly worse, with the S&P 500 and Russell 2000 falling 24% and 16% in 12 months after the first cut.
In the 2001 recession, small-caps substantially outperformed and gained 2% while the S&P 500 fell 14%.
If the Fed can avoid a recession, then history says more upside is coming.
The shift from restrictive Fed policy to rate cuts will be a big transition and it will come with volatility.
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- CornellRudolph·08-30That's an interesting analysis of the historical performance of stocks after rate cuts.LikeReport
- River0·08-30Great analysis! Excited for potential upside. [Like]LikeReport