Vikki Zhao
PUBLISHED September 18, 2024, 2:30 PM EST. 1 min read
On September 18, the Federal Reserve announced a 50 basis point reduction in its target range for the benchmark interest rate, lowering it to 4.75%-5%. This marks the first rate cut since March 2020.
Over the past four years, the Federal Reserve raised interest rates 11 times, with the benchmark rate rising from 0%-0.25% to 5.25%-5.5%. Historically, almost every rate-cutting cycle has been accompanied by a recession in the U.S. economy.
Following the first rate cut by the Federal Reserve, market reactions are as follows:
- U.S. stocks surged then pulled back, with the Dow Jones and S&P 500 turning negative, while the Nasdaq’s gains narrowed to less than 0.2%.
- The yield on the 2-year U.S. Treasury note dropped 8 basis points in the short term, currently at 3.598%.
- Spot gold surged to a record high, breaking above $2,590 per ounce, setting a new all-time high.
- Spot silver climbed above $31 per ounce, up 1.03% on the day.
- The market believes there is now a nearly 57% chance that the Bank of Canada will cut rates by 50 basis points in October, up from 46% before the Federal Reserve’s rate cut.
