Stocks could rise 24% after the Federal Reserve cuts interest rates for the first time later this year.
Ned Davis Research analyzed the data and found that interest rate cuts combined with the absence of a recession create a very bullish environment for stocks.
“The bottom line is that stocks tend to rebound within a year of the first rate cut,” NDR said.
Stocks poised for big gains Fed prepares for first rate cut since 2019, according to a Thursday report from Ned Davis Research.
Ed Clissold, chief U.S. strategist at Ned Davis Research, analyzed the numbers and found Dow Jones Industrial Average The average increase in the first year after the Fed cuts interest rates is 15%, but when rates are cut and the economy is not in recession, the increase is even greater, reaching 24%.
“Had there not been a recession in the year before and after the first rate cut, the Dow Jones Industrial Average would have risen even more,” Clissold said.
The Federal Reserve has said it plans to cut interest rates at least three times this year after inflation slowed sharply from its peak in June 2022. GDP grows steadily and the job market is flexible It signals to investors that a recession does not appear to be imminent, setting the stage for solid stock market gains ahead.
If the 24% average rise after the first rate cut in a non-recession period materializes, the Dow Jones would rise to around 47,000.This level is consistent with JC Parets of All Star Charts recently issued a bullish call, If the dollar falls below that, he said, the Dow could soar to 50,000.
“The bottom line is that stocks tend to rebound within a year of the first rate cut,” Clissold said.
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