The S&P 500 recently closed above 6,600 for the first time, but sentiment is mixed as investors await the Fed’s interest rate decision. The Fed is expected to announce a 25 basis point rate cut today. Markets will be watching how dovish the Fed is, what its forward guidance says, how many cuts are anticipated for later in the year (October, December). The announcement is expected at 7pm. Given the strong rally caused by expectations of a rate cut, we could see the Fed meeting as a trigger to lock in gains, especially if guidance is less dovish. In another scenario if the Fed cut rates by 50% markets will rally further. I think a 25% cut is already in the price so anything higher would be bullish.
I think the cut is priced in because some markets that are sensitive to the cuts have already turned down like Bitcoin and the FTSE. Bitcoin rallies when interest rates are lowered, Bitcoin rallied in the last five months but recently it has been declining, it is no longer following the S&P to new highs. A sign of exhaustion.