Fed Cuts Rate by 0.25%; Stocks Reach Highs

Yesterday, the Federal Reserve announced a unanimous decision to lower the interest rate from 4.75% to 4.50%, marking the second consecutive cut—a move in line with analyst expectations and forecasts.

“This move will support further progress in controlling inflation as we aim for a more neutral stance over time,” said Fed Chair Jerome Powell.

According to Bloomberg, this decision aligns with the Fed’s efforts to support robust U.S. economic growth, creating positive sentiment for stock indices as newly re-elected President Donald Trump is expected to introduce economic stimulus measures.

However, could tensions arise between the new administration and the Fed? Trump has a record of publicly criticizing Powell and even considered dismissing him during his first term. At a press conference yesterday, Powell was asked if he would step down if requested by Trump, to which he replied decisively, “No.” He added that the removal or demotion of Fed board members, including himself, is “not legally permissible.” Powell emphasized that the U.S. election results would have "no effect" on the Fed’s decisions in the near term.

For now, optimism prevails on U.S. stock markets. Analysis of the Nasdaq 100 index (US Tech 100 mini on FXOpen) shows that:

→ The price has reached a historic high, surpassing the round figure of 21,000 points and the previous peak set in July around 20,800.
→ It has moved above the upper boundary of the ascending channel (shown in blue), within which it had fluctuated following the early August sell-off.
→ The RSI indicator signals significant market overbought conditions.

Given these factors, the market could be vulnerable to a correction after this recent rally. If a pullback occurs, it may indicate that market sentiment has already priced in the impact of the election outcome and the Fed rate cut. Additionally, the upper black line shown on the chart may act as resistance, potentially cooling the current bullish momentum.

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