The Fed Will Cut Interest Rates Next Year, According to Wall Street. Here's What It Means for Stocks.
When the COVID-19 pandemic struck in early 2020, the U.S. Federal Reserve acted quickly to slash interest rates to a historically low range of between 0% and 0.25%. The federal government also assembled a series of stimulus packages to shield households and businesses from lost income as society ground to a halt.
In a somewhat counterintuitive move (given the circumstances), the benchmark S&P 500 (SNPINDEX: ^GSPC) stock market index soared higher. Low interest rates served as rocket fuel for companies because funding was cheap and plentiful, which meant they could invest heavily in growth.
Thankfully, the measures undertaken by the Fed and the government worked, and the worst of the health and economic emergencies were over by the end of 2021. But that marked the dawn of a new challenge: rising inflation.
Source Fool.com