by Financial Markets Reaction to Fed Rate Cuts
The Federal Reserve’s chairman Jerome Powell announced the second rate cut of 2019, by 25 basis points (bps), at the end of the two-day Federal Open Market Committee (FOMC) meeting this Wednesday. Global economic growth and trade-war related uncertainties leading to slowdown in business investments were cited as key reasons for the latest cut. Hence, banking stocks are expected to record lower margins at the end of the current quarter
However, the central bank acknowledged U.S. household spending to be strong amid robust job market, rising income and solid consumer confidence. Therefore, investors’ confidence were upbeat on banking stocks as there were no indications of further rate cut.
The federal rate cuts are really interesting, so with both lower investors confidence but then additional higher investors confidence will this essentially “even out” in terms of confidence of investors in the market then?
What other challenges are worsening consumer markets besides auto loans?
Reed, this is something that constantly fluctuates markets of any type. Investor confidence is a huge factor in influencing the flows of the markets, and it all really depends on the situation. But when the Fed cuts rates, this deeply decreases investor confidence because the Fed is most likely covering up recessionary signals.
Some other challenges that are worsening consumer markets include stabilizing GDP numbers, which is also a huge influencer in investor confidence.