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player ready...Investors will be closely watching the Federal Reserve meeting Tuesday to see if policymakers cut interest rates, as many analysts expect.
Since the beginning of the last decade, the Fed has undertaken four separate series of cuts in its target federal funds rate.
Usually, the result has been to buoy the stock market: Each time, the benchmark Standard & Poor’s 500 index rose on the day of the cut, at least slightly. A surprise half-point cut between meetings on Jan. 3, 2001, sent blue-chip stocks up 5 percent that day.
The gains often are extended in the following months as the Fed continued to cut rates — each time, policymakers lowered interest rates at least twice more in the next 12 months.
But the euphoria doesn’t always last: After the January 2001 cut, in the midst of a powerful bear market, stocks were sharply lower at both three months and one year later. That rate cut, and others that followed, couldn’t head off a recession that began in March 2001 and lasted through November of that year, battering stocks.