JPMorgan Chase Warning: Fed Rate Cut as Scheduled Could Trigger "Buy the Rumor, Sell the News" Market Reaction
BlockBeats News, September 9th, the U.S. stock market has hit more than 20 all-time highs this year. However, JPMorgan Chase has issued a warning, stating that if the Federal Reserve cuts interest rates next week as expected, it may trigger a "buy the rumor, sell the fact" sell-off. Andrew Tyler, Head of Market Intelligence at JPMorgan Chase, said: "The current bull market seems unstoppable, forming new support amid the weakening of existing pillars. But if the Fed cuts rates at the meeting on September 17th, as widely expected by the market, this could evolve into a 'buy the rumor, sell the fact' event."
The S&P 500 index has risen over 30% from its April low when Trump launched the first shot of the global trade war. The stock market has shown resilience so far. However, as the impact of tariffs begins to show, recent weak employment data, and the historically worst-performing September for U.S. stocks coinciding with the expected rate cut, investors are treading cautiously. Tyler's concern about the upcoming rate decision meeting is that while Thursday's release of the Consumer Price Index (CPI) is unlikely to deter the Fed from cutting rates, comments from publicly traded companies and private enterprises on inflation indicate that more "tariff-induced cost pass-through" is about to occur, the speed and scale of which are still unknown. Furthermore, a rate cut may stimulate labor demand, leading to the typically 'sticky' wage inflation. (Jin10)
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