Fed cuts rates, S&P 500 enters correction territory

fool.com

The U.S. Federal Reserve has cut interest rates three times since September 2024, following a period of high inflation. The Consumer Price Index is now under control, with inflation at 2.8% in February 2025, allowing for these cuts. Despite the rate cuts, the S&P 500 index has entered correction territory, dropping over 10% from its recent high. Historically, rate cuts have often preceded market corrections due to economic shocks, not solely because of the cuts themselves. Current economic indicators show potential slowing, with GDP growth predicted to shrink by 2.4% in early 2025. Unemployment has risen slightly, and consumer sentiment is at its lowest since November 2022, raising concerns among investors about future market conditions.


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