The performance of the S&P 500 following the Federal Reserve's rate cuts largely hinges on whether the economy is in a recession or not.
According to a detailed analysis by Vickie Chang, an analyst at Goldman Sachs, historical data reveals a sharp contrast in how equities react to rate cuts during recessions compared to other economic phases.
Chang noted that in recessionary periods, stock markets typically experienced meaningful declines after the Fed's initial rate cut. In contrast, during "growth scares" or "normalization" periods, equities have rallied strongly.
"History tells us that why the Fed is cutting matters—asset...
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