The Federal Reserve finally (yes, finally) pulled the trigger on a rate cut, shaving off half a percentage point, the high end of what everyone was guessing. A cut was all but inevitable, with just one burning question before Wednesday: How much? Would it be the polite quarter-point that says, “we are being careful,” or the bolder half-point that screams, “we mean business!”
For history enthusiasts, the table below outlines the Federal Reserve’s rate changes in this century:

Most analysts expected the more cautious route, as the Fed had been walking on eggshells up until now, even deciding to sit on its hands in July. By choosing the half-point slash, Jerome Powell and his Fed colleagues can now play both sides of the field.
There are some people out there who think this rate cut shows the Fed is secretly biting its nails over the economy’s resilience. I’m not in that camp. Maybe they are seeing storm clouds, but I’m seeing things differently. I’m more positive than others.
The lesson from history is clear. How stocks react to rate cuts depends entirely on the economy’s mood. If you are overly concerned about the stock market, buying some protection makes more sense to me than selling your stocks and possibly missing out.
As investors, it is crucial to stay flexible like financial gymnasts. Getting too comfy with current market conditions is like assuming the weather in London will stay sunny forever. We will be holding our positions through the rest of the year, with some fine-tuning for some trades.
Asked if the Fed was trying to influence the election. “This is my fourth presidential election at the Fed. It is always the same,” Powell said. “We are asking what is the right thing to do for the people we serve. We make a decision as a group and we announce it.”
Wall Street, as expected, treated the news like a sugar high. The S&P 500 leaped up like it was trying to dunk, jumping 1% and even flirting with its all-time intraday high, only to cool off and close down slightly, a classic market mood swing.
As for Treasury yields, they continued to tiptoe up like someone sneaking into the kitchen after midnight. The two-year yield gained a whole two basis points. Not exactly fireworks, but I will take it. Elsewhere, the surprise big cut is hitting the US dollar across the board.
