As expected, the Fed has been coy about cuts, leaving markets torn between pricing in a 25- or 50-basis-point reduction.
"In cycles where rate cuts were able to prolong economic expansion and keep corporate earnings on an upward trend, stocks performed quite well," Belski wrote in a mid-September note.
AdvertisementWhile rate cuts aren't a cure-all, Belski is confident that the economic expansion will continue, which will keep this bull market on firm footing.
"But with significantly strong trailing one-year performance headed into this initial rate cut, future gains are likely to be more muted relative to historical norms."
Sectors poised to outperform as the Fed finally cuts ratesAfter outlining how US stocks broadly have fared following cuts in the last four decades, BMO shared relative sector performance before and after periods of rate declines.
Persons:
—, that's, Ohsung Kwon, Brian Belski, Belski
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Service, Federal Reserve, Business, " Bank of America, BMO Capital Markets, Fed, BMO
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