US Stock Rally Faces Fed Cut Inflection Point at $14T Mark

A substantial $14 trillion rally has propelled U.S. stocks to record highs, and this impressive ascent is now approaching a critical inflection point. Investors are keenly awaiting the Federal Reserve's upcoming monetary policy meeting, as the market's future direction appears heavily contingent on expectations that the Fed will soon resume cutting interest rates. The S&P 500 Index, in particular, has surged 32% from its April lows. This robust performance is largely attributed to investor optimism surrounding anticipated reductions in borrowing costs throughout the year, with a 25-basis point cut widely expected. Historical analysis from Ned Davis Research, extending back to the 1970s, offers a positive outlook for market participants. On average, the S&P 500 has historically shown an increase of 15% one year after the Federal Reserve has resumed rate cuts following a pause of six months or more. This performance is notably stronger than the average 12% gain observed in the same timeframe following the initial cut of a typical rate-cutting cycle.