How Did the Fed's Interest Rate Cuts Affect The Markets in The Past?

How Did the Fed's Interest Rate Cuts Affect The Markets in The Past?

The Fed held an interim meeting, dropping policy interest from the range of 1.75-1.50 to 1.00-1.25. After the decision, indices closed the day with hard-sales in the USA The US Federal Reserve (Fed) went to emergency interest cuts in order to reduce the damage caused by the Covid 19 outbreak, which occurred in Wuhan, China, and spread to more than 91,000 people worldwide. It seemed unlikely that the Fed would cut interest rates at the policy meeting planned on March 17-18, but for the eighth time in the history of the Fed, for the first time since October 2008, it went down to the urgent meeting and cut interest rates to 1-1.25 percent. Fed President Jerome Powell, who held a press conference, stressed that it is aimed to eliminate the risks to trade and tourism that are disrupted by the virus epidemic in China. It is quite unusual for the Fed to negotiate at a date other than the meeting date specified, and to cut the emergency interest rate, and this is the first time since the 2008 financial crisis. The markets have so far not reacted positively to the Fed's move. Following the Fed's interest rate decision, the Dow Jones Index closed the day with a 2.94 percent decrease. The S&P 500 index fell 2.81 percent to 3,003.37 and the Nasdaq index fell 2.99 percent to 8,684.09 points. Following the Fed decision taken on Tuesday, the market reaction was also unusual. Bespoke Investment Group calculated that interim rate decisions brought an average of 1.2 gains. Bespoke researchers wrote in the note that "The S&P Index fell by an average of 0.76 percent in the week following the meetings with an interim rate decision". However, in the other seven interim decisions, the markets may recover and follow a buy-back course in six of the following seven months. After six of the previous seven interviews, the S&P index reached an average of 2.58 gains. ". "We don't have all the answers," Powell said on Tuesday, acknowledging that the Fed rate cut would not reduce the risk of US citizens' contamination or improve broken supply chains. Maybe that's why the markets have been responding badly to the cut so far. "