In the early hours of today Beijing time, the Federal Reserve made a significant decision, announcing a 25 basis point interest rate cut. Following this adjustment, the target range for the federal funds rate has been lowered to 4.25% - 4.50%. However, unexpectedly, once this news was released, the U.S. stock market instantly fell into chaos, with the Dow Jones Index showing an extremely rare streak of 10 consecutive declines, a situation that has been very uncommon in the past 50 years.

Generally speaking, interest rate cuts are often seen as positive news for the market, so why did the U.S. stock market experience a crash this time?

The root of the issue lies in the fact that the 25 basis point cut was already anticipated by the market, while the subsequent statements from the Federal Reserve completely changed market expectations.

The Federal Reserve claimed that the pace of interest rate cuts this year is too fast, and that it will not continue this pace next year, clearly stating that there will be at most two rate cuts next year.

As a result, through its superb expectation management techniques, the Federal Reserve transformed the originally positive effects of the rate cut into a negative effect similar to that of an interest rate hike, leading to severe market fluctuations.

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