{"id":13393,"date":"2024-09-18T19:54:04","date_gmt":"2024-09-18T19:54:04","guid":{"rendered":"https:\/\/zacksim.com\/blog\/?p=13393"},"modified":"2024-09-18T19:54:48","modified_gmt":"2024-09-18T19:54:48","slug":"inflation-improves-investors-await-fed-rate-cut","status":"publish","type":"post","link":"https:\/\/zacksim.com\/blog\/inflation-improves-investors-await-fed-rate-cut\/","title":{"rendered":"Inflation Improves, Investors Await Fed Rate Cut"},"content":{"rendered":"\n<p><em>Charlie C. from Baltimore, MD asks: <\/em>Hello Mitch, I saw last week that inflation has come down further just before the Federal Reserve is set to meet this week. Do you think the move was enough to push the Federal Reserve into a 50-basis point rate cut? How do you think stocks would react to a bigger cut? Thank you.<\/p>\n\n\n\n<p><strong>Mitch\u2019s Response:<\/strong><\/p>\n\n\n\n<p>Thanks for writing. August was indeed a good month for inflation data. According to the U.S. Labor Department, the consumer price index (CPI) measure of inflation rose 0.2% from July and 2.5% from a year earlier, which marked a solid improvement from July\u2019s 2.9% year-over-year increase. Core CPI, which strips out volatile food and energy categories, rose 3.2% year-over-year, roughly consistent with July\u2019s print.<sup>1<\/sup><\/p>\n\n\n\n<p>You can see in the chart below that the CPI (blue line) and Core CPI (red line) continue to trend in the right direction, which has very much opened the door for rate cuts.<\/p>\n\n\n\n<figure class=\"wp-block-image size-full\"><img loading=\"lazy\" decoding=\"async\" width=\"550\" height=\"188\" src=\"https:\/\/zacksim.com\/blog\/wp-content\/uploads\/2024\/09\/pic1resized.png\" alt=\"\" class=\"wp-image-13394\" srcset=\"https:\/\/zacksim.com\/blog\/wp-content\/uploads\/2024\/09\/pic1resized.png 550w, https:\/\/zacksim.com\/blog\/wp-content\/uploads\/2024\/09\/pic1resized-300x103.png 300w\" sizes=\"auto, (max-width: 550px) 100vw, 550px\" \/><figcaption class=\"wp-element-caption\"><strong><em>Source: Federal Reserve Bank of St. Louis<sup>2<\/sup><\/em><\/strong><\/figcaption><\/figure>\n\n\n\n<p><strong><u><a href=\"https:\/\/go.steadyinvestor.com\/dos-and-donts-of-volatility?source=zim&amp;medium=blog&amp;term=mitchsmailbox_dos_and_donts_zim_09_19_2024&amp;content=dos_and_donts\" data-type=\"link\" data-id=\"https:\/\/go.steadyinvestor.com\/dos-and-donts-of-volatility?source=zim&amp;medium=blog&amp;term=mitchsmailbox_dos_and_donts_zim_09_19_2024&amp;content=dos_and_donts\">Top Tips and Mistakes in Volatile Markets<\/a><\/u><\/strong><\/p>\n\n\n\n<p>Volatility is unavoidable, but without the right strategies, it can wipe out gains fast.<\/p>\n\n\n\n<p>Our guide,&nbsp;<em><a href=\"https:\/\/go.steadyinvestor.com\/dos-and-donts-of-volatility?source=zim&amp;medium=blog&amp;term=mitchsmailbox_dos_and_donts_zim_09_19_2024&amp;content=dos_and_donts\" data-type=\"link\" data-id=\"https:\/\/go.steadyinvestor.com\/dos-and-donts-of-volatility?source=zim&amp;medium=blog&amp;term=mitchsmailbox_dos_and_donts_zim_09_19_2024&amp;content=dos_and_donts\">\u2018<strong><u>The Do\u2019s and Don\u2019ts of Stock Market Volatility\u2019<\/u><\/strong><\/a><\/em>&nbsp;is essential for protecting your investments. Backed by 30 years of experience, we reveal critical recommendations for investors, including:<\/p>\n\n\n\n<ul class=\"wp-block-list\">\n<li>Three best practices to successfully manage periods of market volatility<\/li>\n\n\n\n<li>Three most common mistakes investors make, and why they are so damaging to your long-term investing goals<\/li>\n\n\n\n<li>Historical data that supports our conclusions and underscores the recommendations we propose<\/li>\n<\/ul>\n\n\n\n<p>If you have $500,000 or more to invest, get our free guide today!<\/p>\n\n\n\n<p><strong><a href=\"https:\/\/go.steadyinvestor.com\/dos-and-donts-of-volatility?source=zim&amp;medium=blog&amp;term=mitchsmailbox_dos_and_donts_zim_09_19_2024&amp;content=dos_and_donts\" data-type=\"link\" data-id=\"https:\/\/go.steadyinvestor.com\/dos-and-donts-of-volatility?source=zim&amp;medium=blog&amp;term=mitchsmailbox_dos_and_donts_zim_09_19_2024&amp;content=dos_and_donts\"><span style=\"text-decoration: underline;\">Download Your Copy Today:\u00a0<em>The Do\u2019s and Don\u2019ts of Stock Market Volatility<\/em>\u00a0<sup>3<\/sup><\/span><\/a><\/strong><\/p>\n\n\n\n<p>By the time readers see this Mitch\u2019s Mailbox, the Fed may have already made their decision on rates. Whether it ends up being 25-basis points or 50-basis points is not of great consequence, in my view. At this stage, what I think is more important is the overall direction of rates, not necessarily the magnitude of each Fed decision.<\/p>\n\n\n\n<p>As far as stocks are concerned, regular readers of my columns know that I do not see monetary policy as a critically influential factor determining the direction of markets. Stocks have gone up during periods of rising rates (see 2023 as a prime example), and they\u2019ve also performed well during periods of easy monetary policy. There are too many other factors\u2014namely earnings\u2014influencing stock prices for one Fed decision to make or break the markets.<\/p>\n\n\n\n<p>It follows that many investors assume that falling interest rates are automatically bullish for stocks. That tends to be true throughout a policy cycle, but history also suggests that stocks can be volatile early on when rate cuts commence. The reason is that historically, the Fed is too late in lowering rates, and they usually have to cut deeper and for longer than most people expect at the front end of their policy pivot.&nbsp;The Fed may be closer to \u2018on time\u2019 in this policy cycle, but that remains to be seen. We remain bullish for other key reasons: expected earnings growth in the next year, lower inflation in the future than we have today and lower rates in the future than we have today.<\/p>\n\n\n\n<p>As the Fed keeps a close eye on inflation, investors must be prepared for any outcome.<\/p>\n\n\n\n<p>To keep your portfolio on track, I\u2019m offering our guide,\u00a0<a href=\"https:\/\/go.steadyinvestor.com\/dos-and-donts-of-volatility?source=zim&amp;medium=blog&amp;term=mitchsmailbox_dos_and_donts_zim_09_19_2024&amp;content=dos_and_donts\" data-type=\"link\" data-id=\"https:\/\/go.steadyinvestor.com\/dos-and-donts-of-volatility?source=zim&amp;medium=blog&amp;term=mitchsmailbox_dos_and_donts_zim_09_19_2024&amp;content=dos_and_donts\"><span style=\"text-decoration: underline;\"><em>\u2018<\/em><strong><em>The Do\u2019s and Don\u2019ts of Stock Market Volatility<u><sup>4.<\/sup><\/u><\/em><\/strong><em>\u2019<\/em> <\/span><\/a>which provides recommendations on how to navigate through this turbulent market and explores:\u00a0<\/p>\n\n\n\n<ul class=\"wp-block-list\">\n<li>Three best practices to successfully manage periods of market volatility<\/li>\n\n\n\n<li>Three most common mistakes investors make, and why they are so damaging to your long-term investing goals<\/li>\n\n\n\n<li>Historical data that supports our conclusions and underscores the recommendations we propose<\/li>\n<\/ul>\n\n\n\n<p>If you have $500,000 or more to invest, get our free guide today!<\/p>\n","protected":false},"excerpt":{"rendered":"<p>Mitch looks at inflation&#8217;s positive trend, and replies to whether the Fed cut will be 25 or 50 basis points&#8230;and whether it will make much difference. <\/p>\n","protected":false},"author":3,"featured_media":13395,"comment_status":"closed","ping_status":"closed","sticky":false,"template":"","format":"standard","meta":{"_acf_changed":false,"footnotes":""},"categories":[1],"tags":[],"class_list":["post-13393","post","type-post","status-publish","format-standard","has-post-thumbnail","hentry","category-uncategorized"],"acf":[],"_links":{"self":[{"href":"https:\/\/zacksim.com\/blog\/wp-json\/wp\/v2\/posts\/13393","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/zacksim.com\/blog\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/zacksim.com\/blog\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/zacksim.com\/blog\/wp-json\/wp\/v2\/users\/3"}],"replies":[{"embeddable":true,"href":"https:\/\/zacksim.com\/blog\/wp-json\/wp\/v2\/comments?post=13393"}],"version-history":[{"count":2,"href":"https:\/\/zacksim.com\/blog\/wp-json\/wp\/v2\/posts\/13393\/revisions"}],"predecessor-version":[{"id":13397,"href":"https:\/\/zacksim.com\/blog\/wp-json\/wp\/v2\/posts\/13393\/revisions\/13397"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/zacksim.com\/blog\/wp-json\/wp\/v2\/media\/13395"}],"wp:attachment":[{"href":"https:\/\/zacksim.com\/blog\/wp-json\/wp\/v2\/media?parent=13393"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/zacksim.com\/blog\/wp-json\/wp\/v2\/categories?post=13393"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/zacksim.com\/blog\/wp-json\/wp\/v2\/tags?post=13393"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}