Week of 09/16-09/20 FED First Interest Rate Cut, 50 Basis Points

The much anticipated interest rate cut from the Federal Reserve was announced on Wednesday to help stimulate the economy from high lingering inflation. The FED decided that 50 basis points was an adequate initial rate cut based on how long the central banking system has waited to gain confidence to act on monetary policy. This is the first time the FED has cut interest rates since March 2020 and analysts are now forecasting an additional rate cut before the end of the year. With two FOMC meetings left in the 2024 calendar, November 6-7 and December 17-18, and with the upcoming U.S. Election; it is going to be a volatile period for the stock market. The S&P 500, Dow Jones, and Nasdaq all rose to record highs on Thursday in reaction to the interest rate cut news, but fell off the highs on Friday mainly due to being a triple-witching day. On company earnings news, FedEx stock fell as the company posted lower quarterly profit and revenue, as well as cutting its full-year financial outlook.

What is a triple witching day?

Triple witching refers to the simultaneous expiration of stock options, stock index futures, and stock index options contracts on the same day. This event typically occurs four times a year, specifically on the third Friday of March, June, September, and December, and can significantly impact market activity in terms of trading volume and volatility. Triple witching days can coincide with other events such as S&P index rebalancing, which can generate additional trading volume and contribute to market volatility.