《Exploring the Reasons Behind the Crash of U.S. Stocks After the Federal Reserve Cuts Interest Rates》
In the early hours of Beijing time today, the Federal Reserve made an important decision, implementing a 25 basis point rate cut, which adjusted the target range for the federal funds rate to 4.25% - 4.50%. However, unexpectedly, after the announcement, the U.S. stock market immediately fell into chaos, with the Dow Jones Index experiencing an extremely rare 10 consecutive days of decline, a phenomenon not seen in nearly 50 years. Generally, interest rate cuts are often regarded as a positive signal for the market, but this time, the U.S. stocks plummeted. The reason is that this 25 basis point cut had already been priced in by the market, and the subsequent statements from the Federal Reserve completely reversed market expectations. The Federal Reserve indicated that the pace of rate cuts was too fast this year and would not maintain that rhythm next year, clearly stating that there would be a maximum of two rate cuts next year. Through this clever expectation management strategy, the Federal Reserve transformed the originally positive effect of the rate cut into a negative impact similar to an interest rate hike, leading to severe market turbulence.
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