The Fed’s decision is the ‘last hurdle’ before Santa’s year-end meeting: Bank of America
The stock market may be able to enjoy its year-end meltdown once Wednesday’s decision by the Federal Reserve is over, according to Bank of America. The central bank is expected to cut its interest rate by a quarter of a percentage point on Wednesday. Gonzalo Asis, an equity analyst at Bank of America, wrote to clients that the move could pave the way for the so-called “Santa rally.” “The 2nd half of December is typically the second strongest period of the year for US stocks, and the S&P is up 83% in the December presidential election period. This week’s FOMC (is not expected to deliver fireworks based on [0.76% S & P 500] implied movement) may be the last hurdle before the Santa rally,” the note said. The stock market may need a clear signal to regain its normal holiday season momentum. The Dow Jones Industrial Average has fallen for nine consecutive sessions for the first time since 1978. .I -DJI 5D mountain Dow Jones Industrial Average in the last five sessions Of course, the rally may require not only a reduction in price, but also a lack of negative surprises from at the Fed Chair Jerome Powell’s press conference or from the updated economic projections of central bankers will be included in a dot plot representing the expected path of interest rates they expect the Fed to reveal fewer rate cuts later than it did during the release of the previous episode in September The labor market has held up better than expected since that meeting , while the latest inflation readings show that the rate of inflation is still high of the Fed’s target of 2%. “Market participants will be watching economic projections to better understand the medium-term path of policy rates and whether the dot for 2025 will show three or two cuts. We think it will be three compared to four in September. Additionally, we expect the dot to show two cuts in 2026 and that time has been revised to 3.125% from 2.9%,” said the note of Bank of America.
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