Why did the market fall sharply despite the Federal Reserve's 25 basis point rate cut?

The Federal Reserve announced a 25 basis point reduction in the federal funds rate to 4.25%-4.50%. This move was originally in line with market expectations and should have been a positive signal. However, the market experienced a comprehensive decline. What is the reason for this?

Rate cut falls short of market easing expectations

Although the rate cut met expectations, Fed Chairman Powell's remarks disappointed the market. He stressed that future policy adjustments would be more "cautious" and clearly stated that rate cuts would need to wait for further improvements in inflation. This "hawkish yet dovish" signal directly suppressed the market's hopes for rapid monetary policy easing.

Discrepancy between market expectations and reality

Investors generally anticipated more easing to boost the economy, but the Fed's statements shattered this illusion, causing market sentiment to shift instantly. In the short term, concerns over a stronger dollar and tightening liquidity intensified selling pressure.

Macroeconomic concerns and capital flight to safety

Worries about a slowdown in global economic growth intensified. The rate cut failed to effectively boost market confidence and instead led to a further influx of capital into safe-haven assets, resulting in a simultaneous pullback in the stock, bond, and even cryptocurrency markets.

Summary of viewpoints:

The Fed's rate cut seems beneficial, but under the dual blows of insufficient market expectations and cautious statements, the market chose to digest negative signals. Future attention should be paid to policy direction and economic data, as short-term adjustments may serve as a buildup for medium- to long-term opportunities.