Bank of America: The market's reaction to the Federal Reserve's 50 basis point rate cut seems to be following a script of "soft easing" or "panic easing"

ChainCatcher news, Bank of America's renowned strategist Hartnett pointed out that the current market reaction to the Federal Reserve's 50 basis point rate cut seems to be following a "soft cut" or "panic cut" script. The U.S. stock and credit markets are digesting expectations of a 250 basis point Fed rate cut by the end of 2025 and an 18% earnings growth in SP500 constituent stocks. He said, "The risks haven't improved much, so investors are forced to chase" the uptrend, with "bubble risk" making a comeback.

As for the reason behind this carnival-like rise, Hartnett explained in his latest report that Wall Street loves "panic cuts" when there is no panic (at least not yet). Meanwhile, the Fed hopes to lower interest rates by 50 basis points so that real interest rates can drop from their highest levels this century and prevent layoffs in small business sectors already in recession.