Breaking: The U.S. economy added 128,000 jobs in October, while the unemployment rate rose to 3.6%
Stocks are facing a test after the Federal ReserveGoing back to 1982, stocks have produced higher-than-average returns when the Fed has finished its easing cycle at the third rate cut, according to Strategas.
In 1985, for instance, the Fed delivered its third and final rate cut of the cycle in an effort to prevent a slowing economy from tipping into recession. The S&P 500 rose 11% over the following six months, Strategas says. The market similarly rose after a series of rate cuts that culminated in 1988. The central bank wound up lowering interest rates 10 more times, the U.S. economy entered a relatively brief recession and the S&P 500 fell 3.8% over the following six months.
If more rate cuts are needed, “then something is very wrong with the economic backdrop, which will eventually weigh on equity performance,” said Todd Sohn, director of technical strategy at Strategas.
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