In each rate cut, the S&P 500 corrects 42.5% on average over 6 and 12 months.

But there is one fact that we must take into account:

All these large corrections have occurred because these cuts came as a late response to a recession:

-2000 (-51%): Dotcom bubble.

-2007 (-58%): Global crisis.

-2019 (-35%): Pandemic.

However, historically there have also been other cuts in times of economic expansion, which were made to counteract only early signs of slowdown (as could be the current case).

In these cases, the corrections have been unremarkable.

Conclusions? The reduction of rates is not usually the catalyst for these corrections, but the crises that follow.

It is clear that the Fed cuts rates when it sees that "something is not working", but this time I doubt that we are facing a strong recession, but rather a mere slowdown.