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Stocks rallied last week ahead of the Federal Reserve’s policy meeting coming up this week.  The Dow Jones Industrial Average advanced 2.6% to 41,394 – the Standard & Poor’s 500 Index gained 4% to 5,626 – the NASDAQ Composite jumped an eye-popping 6% to 17,684.  For the S&P 500 and the NASDAQ Composite, it was their best weekly performance of the year.     Investors are enthusiastic about the long-awaited interest rate cut by the Federal Reserve, which is virtually certain to come this week when the Fed concludes its policy meeting on Wednesday.  While the financial markets are certain the Fed will cut interest rates this week, the size of the rate cut has now become a “coin-flip” type of situation (after some sharp fluctuations during the week).     Investors are now split evenly as to whether the Fed will cut rates ¼ percentage point or opt for a bigger ½ percentage point cut.  According to CME FedWatch as the trading week ended on Friday, probabilities indicated about an equal chance of a ¼ or ½ point cut.  Previously the probability indicated more likelihood for the smaller ¼ point cut.  More market discussion about a ½ point cut has been surfacing and former Fed President Bill Dudley commented late Thursday that there is a strong case for ½ point cut.     The recently increased chance of a ½ percentage point rate cut is benefitting small cap stocks, with the Russell 2000 Index significantly outperforming the major averages on Friday and posting a solid gain of 4.4% last week.  Smaller companies are more sensitive to changes in interest rates as they typically borrow more money and rely more on floating rate loans.     The stock market likes lower interest rates and investors have been waiting for this upcoming cut and shift in monetary policy for a long time.  When something is widely expected, however, the actual occurrence of that even often results in little market movement.  As discussed above, an interest rate cut this week it totally expected and has been priced into the market.  What the market will be watching for more is Federal Reserve commentary on the pace and quantity of future interest rate cuts, the reasoning behind why the Fed cut either the ¼ or the ½ percentage point, and their outlook on the economy and inflation.     Getting a fresh update on the rate cut probabilities from a few moments ago, there is now a 39% chance for a ¼ point cut and a 61% chance for a ½ point cut – according to CME FedWatch.     As always, feel free to reach out to us with any questions or if you would like to schedule a meeting.     All the best – Southport Station Financial Management, LLC

Interest Rate Cut Ahead – Monday Morning Market Memo – September 16, 2024

Stocks rallied last week ahead of the Federal Reserve’s policy …

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Market Update -Monday Morning Market Memo – September 9, 2024

Market Update -Monday Morning Market Memo – September 9, 2024

The major stock market indices closed lower on Friday, with …

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Fed (Interest Rate Cut) Ahead – Monday Morning Market Memo – August 26, 2024

Fed (Interest Rate Cut) Ahead – Monday Morning Market Memo – August 26, 2024

The highlight of last week was Federal Reserve Chair Jerome …

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Roller Coaster Stock Market – Monday Morning Market Memo – August 12, 2024

Roller Coaster Stock Market – Monday Morning Market Memo – August 12, 2024

Throughout history, the stock market has always been somewhat, but …

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Earnings Action! – Monday Morning Market Memo – July 29, 2024

Earnings Action! – Monday Morning Market Memo – July 29, 2024

Earnings Season is well underway.  Let’s start with a look at …

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Market Recap & Look Ahead – Monday Morning Market Memo – July 22, 2024

Market Recap & Look Ahead – Monday Morning Market Memo – July 22, 2024

Stocks ended last week on a down note Friday as …

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Into Earnings Season & Rate Cut Ahead (?) – Monday Morning Market Memo – July 15, 2024

Into Earnings Season & Rate Cut Ahead (?) – Monday Morning Market Memo – July 15, 2024

Earnings Season kicked off last week, highlighted by reports from some …

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Jobs Report Look & Earnings Season Ahead – Monday Morning Market Memo – July 8, 2024

The Jobs Report released last Friday morning by the U.S. Bureau of Labor …

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Market Review & Preview – Monday Morning Market Memo – July 1, 2024

Market Review & Preview – Monday Morning Market Memo – July 1, 2024

The major stock market averages finished little changed last week.  …

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Market Update – Monday Morning Market Memo – June 24, 2024

Market Update – Monday Morning Market Memo – June 24, 2024

Looking at last week’s action – the Standard & Poor’s 500 …

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How About that Jobs Report – Monday Morning Market Memo – June 10, 2024

How About that Jobs Report – Monday Morning Market Memo – June 10, 2024

The major stock market averages all finished higher last week.  …

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Earnings Wrap – Monday Morning Market Memo – June 3, 2024

Earnings Wrap – Monday Morning Market Memo – June 3, 2024

As we often say – earnings are the mother’s milk of …

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The Big 40! – Monday Morning Market Memo – May 20, 2024

The Big 40! – Monday Morning Market Memo – May 20, 2024

The “Big 40” we are writing about here does not …

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Losing Streaks Snapped & Earnings Action! – Monday Morning Market Memo – April 29, 2024

Losing Streaks Snapped & Earnings Action! – Monday Morning Market Memo – April 29, 2024

The major stock market averages all gained ground last week.  …

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Tech Retreat – Busy Week Ahead -Monday Morning Market Memo – April 22, 2024

Tech Retreat – Busy Week Ahead -Monday Morning Market Memo – April 22, 2024

The tech-heavy NASDAQ Composite lost 2% Friday, falling for its …

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