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This Week’s Market Recap… 📊

All eyes were on the Federal Reserve this week as it held its final meeting of the year. In a widely anticipated move, the Fed cut interest rates by 25 basis points (0.25%), bringing the federal funds rate to a range of 4.25%–4.50%.

While such a rate cut might typically be seen as a positive signal for the markets, this time the reaction was anything but. In fact, Wednesday’s sell-off marked the worst market reaction since March 2020—a date that needs no further explanation.

The catalyst for this sharp pullback wasn’t the rate cut itself but the Fed’s quarterly Summary of Economic Projections, which includes the closely watched “dot plot.” This chart revealed a notable shift in expectations: the Fed now anticipates just two rate cuts in 2025, down from the four previously expected.

The market, which had priced in those four cuts, was caught off guard. The result? A broad-based sell-off, with all major indices dropping more than 2%. The S&P 500 and Nasdaq took particularly steep hits, each declining over 3%—making it one of the toughest trading days in two years.

I was a little surprised by the reaction to the meeting. Coming into the announcement, most economists and strategists were predicting a similar hawkish narrative from the Fed. However, this did not matter, and rates rose and equites declined.

That said, I believe this sell-off may ultimately prove healthy for the market. After months of consistent gains, a pullback like this can help reset expectations and pave the way for more sustainable growth. Looking ahead, I remain optimistic that the market will finish the year higher than where we stand today.

As always, stay positive, stay invested, and keep your long-term goals in focus!

Have a wonderful weekend!!

Top ETFs on our Radar… 📈

The iShares Expanded Tech-Software Sector ETF has performed exceptionally well this year. Software companies have shown strong performance as investors seek to identify the next big winner in AI.

Tune in every Monday and Friday for in-depth Market Analysis, Recaps, and a featured Stock & ETF.

Thanks for reading and have a great week!

-Ryan

@Theinvestingauthority