How Much Will the Fed Cut Rates?

Plus: What happens to stocks when the Fed lowers rates, good news on inflation, and does stock market history matter? [Morningstar](?utm_source=eloqua&utm_medium=email&utm_campaign=newsletter_smartinvestor&utm_content=57643&elqTrackId=6d43331340c74d27a4871a8623a9fc32&elq=6c91c529ed7048f995ce53762bcd3e7e&elqaid=57643&elqat=1&elqCampaignId=29412&elqak=8AF573494826257B87C690BA5DD20C954044FC3435E4888F3E55F70F62DF66E95E6F) [Smart Investor] Smart Investor [Tom Lauricella, chief markets editor]( Connect with Tom on [LinkedIn]( [Tom Lauricella] In this week's newsletter: - [How Much Will the Fed Cut Rates?]( - [What Happens to Stocks When the Fed Starts Cutting Rates?]( - [CPI Report Clears the Way for a Fed Quarter-Point Rate Cut]( - [Should You Ignore Past Stock Market Returns?]( - [What Falling Interest Rates May Mean for the 60/40 Portfolio]( I’ve been in the markets reporting biz for quite some time now, long enough to see a decent number of Federal Reserve interest rate cycles. And from where I sit, this is probably the most anticipated rate cut in history. After any number of false dawns, the Fed is widely [expected to lower rates at this coming week’s meeting](. This will be the first cut since the Fed started what would become its most aggressive series of rate hikes in its history in early 2022. A critical variable here, of course, is good news on inflation. This past week, the Consumer Price Index came in a touch above expectations. But Morningstar’s chief US economist Preston Caldwell explains why the inflation trend is still [heading in the right direction](. With inflation coming down and the jobs market softening, the open question is how much the Fed will cut rates. The bond market is leaning toward a modest quarter-point cut. But what if the Fed goes with a more aggressive half-point easing? What kind of signal will that send? [Sarah Hansen looks at the scenarios](. The next question, of course, is what this will mean for the markets. We took a close look at what history tells us about how stocks respond when the Fed starts cutting rates. The takeaway: [Be prepared](. Of course, with most investors holding portfolios that mix stocks and bonds, there’s more to the story than just how stocks respond. This can be seen in the performance of 60/40 stock and bond portfolios. Check out this video, in which Susan Dziubinski and Jason Kephart chat about [what falling rates might mean for 60/40 portfolios](. Lastly, John Rekenthaler digs deep into the research on stock market history, wondering what the record shows when it comes to past performance predicting future returns. [It’s a great read](. That’s it for this week! As always, check out our [Markets page]( for our latest coverage, live stock market updates, and [our weekly calendar]( of key upcoming data and events. [How Much Will the Fed Cut Rates?]( [How Much Will the Fed Cut Rates?]( A smaller cut is narrowly expected, but a more aggressive move is possible. Sarah Hansen [Read More]( Share: [facebook]( [twitter]( [linkedin]( ADVERTISEMENT [media]( [media] Markets and the Economy [Will Active ETFs Outnumber Passive ETFs?]( [Will Active ETFs Outnumber Passive ETFs?]( Active ETF launches are outpacing index trackers, but most are not the old-fashioned stock-picking kind. Gabe Alpert [What Falling Interest Rates May Mean for the 60/40 Portfolio]( [What Falling Interest Rates May Mean for the 60/40 Portfolio]( Plus, a look at the 60/40 portfolio’s performance in 2024. Jason Kephart, Susan Dziubinski [Should You Ignore Past Stock Market Returns?]( [Should You Ignore Past Stock Market Returns?]( Many investors are influenced by how stocks have recently performed. Should they be? John Rekenthaler [CPI Report Clears the Way for a Fed Quarter-Point Rate Cut]( [CPI Report Clears the Way for a Fed Quarter-Point Rate Cut]( Despite slightly higher monthly reading on core inflation in August, the trend is looking better. 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Christine Benz, Jeffrey Ptak [10 High-Risk Stocks to Avoid]( [10 High-Risk Stocks to Avoid]( Here are the most overvalued stocks that we cover. Susan Dziubinski Chart of the Week [What Happens to Stocks When the Fed Starts Cutting Rates?]( [What Happens to Stocks When the Fed Starts Cutting Rates?]( The answer: It varies, so be prepared. Sarah Hansen [Read More]( Share: [facebook]( [twitter]( [linkedin]( Recent Earnings [Moderna: R&D Day Brings Dramatic Strategic Shift]( [Boeing: Machinists Union Strike Unavoidable and Unfortunate]( [Adobe: Strong Quarter Overshadowed by Light Revenue Guidance]( [Lithium: Producer Shares Rally on High-Cost Supply Cut]( [Broadcom: AI Growth and VMware Integration Align With Our Thesis Valuation]( [Recent Company Earnings]( Discover actionable opportunities today with our earnings coverage and analyst insights. What are the secrets to a healthy, happy, and wealthy retirement? Find out with Christine Benz's new book, "How to Retire". 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