Fed decision is ‘final hurdle’ before Santa’s year-end rally: Bank of America
According to Bank of America, the stock market could enjoy a typical year-end downturn after Wednesday’s Federal Reserve decision comes to an end. The central bank is expected to cut its benchmark interest rate by a quarter of a percentage point on Wednesday. Gonzalo Asis, associate equity analyst at Bank of America, said in a note to clients that the move could clear the way for the so-called “Santa Claus rally.” “The second half of December is typically the 2nd strongest period of the year for US stocks and the S&P has risen 83% of the time in December during Presidential election years. This week’s FOMC (not expected to bring fireworks based on the [0.76% S & P 500] “could be the last hurdle before a Santa rally,” the note said. The stock market may need the all-clear sign to find its footing for the typical holiday season Stocks have struggled in recent days, with the Dow Jones Industrial Average falling for nine consecutive sessions for the first time since 1978. .DJI 5D Industrials peak Dow Jones in the past 5 sessions Of course, a recovery may require not only interest rate cuts but also the absence of negative surprises from Fed Chairman Jerome Powell’s press conference or from updated economic forecasts from central banks. The central bank will include a dot chart showing the expected path of interest rates. Many on Wall Street are expecting the Fed to cut interest rates less over time than the previous dot chart released in September The labor market has performed better than expected since the start meeting, while recent inflation indicators show that price growth is still higher than the Fed’s 2% target. “Market participants will be watching economic forecasts to better understand the medium-term path of policy rates and whether the 2025 mark will feature three or two cuts. We expect it will reaching three versus four in September. Additionally, we expect the dot to show two cuts in 2026 and in the longer term to be revised up to 3.125% from 2.9%,” the note said. of Bank of America said.
