How Markets Historically Performed After Rate Cuts

The Fed started a new rate cutting cycle earlier this month by taking the Fed Funds rate down by 0.50%.

If curious to know how this could affect you, check out the blog we shared before the announcement: Interest Rate Cuts – Coming Soon? How Low Will They Go?

With the first rate cut of 2024 now behind us, what clues does history share regarding how the stock market performs after these events?

Since 1982, there have been nine rate cut cycles. Following the first cut, in seven of these nine events, the market generated positive returns…78% of the time.

The average return in the twelve months following the first rate cut during these years, was 13% with returns ranging from -22% to 49%.

Remember, one of the best investment strategies is to invest early, keep investing, and stay invested. History is a never a guarantee of future performance, but the market has historically always recovered from declines to achieve new highs.

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