On the eve of the US Federal Reserve meeting, where an interest rate cut is expected, leading Wall Street strategists focus on the fact that the state of the American economy has a more significant impact on the stock market than the size of the rate cut. Although the Fed is expected to cut the rate by 25 bps, and some predict a reduction of even 50 bps, Wall Street strategists are focusing on the risk of recession in the economy after a long period of high rates. Analysts believe that if the labor market data weakens, stock indexes may begin to fall, regardless of the magnitude of the Fed's rate cut. If the labor market strengthens, a series of gradual rate cuts until mid-2025 may support the growth of stocks. They also emphasize that changes in interest rates alone are not a determining factor for the stock market in an uncertain economy. However, it is worth noting that in the past, the initial reaction of the stock market to the beginning of monetary easing by the Fed was restrained, and subsequent results varied greatly depending on the state of the economy.
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