Fed Moves, Markets Soar, & What Wall Street Won’t Tell You

This week’s Money Wise show focuses on the market’s reaction to the Federal Reserve’s highly anticipated rate cut. The Fed trimmed the federal funds rate by 0.25%, marking its first cut since December 2024. While many expected a “sell the news” moment in stocks, the opposite occurred: the Dow, S&P 500, and NASDAQ all closed at all-time highs by Friday. Instead, the “sell the news” reaction appeared in the bond market, where Treasuries sold off after weeks of strong buying that had briefly pulled the 10-year yield below 4%.

The crew also discusses the historical significance of this rally. Since April’s lows, the S&P 500 has surged more than 25%, only the 12th time in the past 70 years such a rally has occurred over 100 days. From a broader perspective, though, the S&P is up about 11.2% since Trump’s election in November 2024, highlighting that context matters when measuring growth. In the second half of the show, they shift to investor education, walking listeners through our stock selection process, emphasizing research, discipline, and avoiding the hype of AI-driven “black box” investment products.

Fed Moves

The Fed’s quarter-point rate cut sent a mixed but important signal to the markets. Lower rates reduce borrowing costs for businesses and consumers, which can fuel corporate profits and economic activity. That optimism pushed stocks higher, with all three major indexes closing the week at record levels. But in the bond market, the story was different. Investors had already piled into Treasuries in anticipation of easier Fed policy, which drove yields down as low as 4% on the 10-year. Once the cut became official, some traders sold off bonds—locking in gains and rotating into equities—causing yields to rise again. The shift highlighted how the Fed’s actions ripple across markets: stocks cheering cheaper money, bonds adjusting to shifting demand, and investors recalibrating portfolios in real time.

In the second hour, the Money Wise guys give listenters a peek into what Wall Street Won’t Tell You. You don’t want to miss the details! Tune in for the full discussion on your favorite podcast provider or at davidsoncap.com, where you can also learn more about the Money Wise guys or take advantage of a portfolio review and analysis with Davidson Capital Management.