Bank of America warns: Fed's dovish rate cut could end stock market rally

10j yang lalu

U.S. Bank strategists warn that if the Federal Reserve takes an overly cautious attitude toward the economic outlook, it could jeopardize the year-end stock market rally. As the S&P 500 index approaches historic highs, investors are hoping for the ideal scenario — the Federal Reserve cutting interest rates alongside easing inflation while the economy remains resilient. However, Bank of America strategist Michael Hartnett points out that if the Fed signals a dovish stance at next week's meeting, this optimism will be tested, as it may imply the economic slowdown is worse than expected. Hartnett wrote in a report: "The only thing that could kill the 'Santa Claus rally' is a dovish rate cut triggering a sell-off in long-term bonds." He is referring to longer-term U.S. Treasury bonds.
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