⏫⏫US500 gains after Fed rate cut

The Federal Reserve's decision to cut interest rates by 50 basis points came as quite a surprise to the market, even though the market gave a 65% probability for such a move. In addition to this decision, the Fed is lowering its interest rate forecasts quite sharply for 2024 and beyond:

• The Fed sees 2 more rate cuts this year, with a median of 4.4% (previously 5.1%)
• The Fed sees 4-5 cuts next year, with a median of 3.4% (previously 4.1%)
• It sees 2.9% in 2026, and sees the same in 2027
• Fed cuts inflation outlook quite a bit for this year: PCE at 2.3% and core PCE at 2.6%
• The Fed also sees the unemployment rate higher to 4.4% in 2024, while it sees 4.2% thereafter. Fed sees no collapse in labor market
• GDP forecast points to 2.0% in 2024 and beyond, indicating a soft landing. 

Source: the Fed

The US500 rises momentarily to 5670 points after the Fed's decision, a test of yesterday's local peaks and early September levels. Later, however, the increases were somewhat reduced in anticipation of Powell's conference at 7:30 PM BST For the time being, the decision is received positively in the market, given the stable economic outlook and the willingness to make strong cuts, which means a win against inflation and the willingness to fight for a stronger labor market. If Powell solidifies the market's expectation of a strong economy and the need for cuts due to the end of the fight against inflation, the US500 could head towards the 5700 point level.