The Fed just cut interest rates by 25 basis points.

This marks the first interest rate cut with Core PCE inflation at 2.9%+ in 30+ years.

This is hardly surprising.

We’ve been talking about it for weeks, so it was essentially a non-event. If anything, it triggered a mild “sell the news” reaction, since most rate-sensitive assets had already rallied weeks ago.

These were the sectors I highlighted a few weeks ago:

• Real Estate & Home Builders → Lower rates reduce mortgage costs, making it easier for buyers to qualify for loans.

• Gold & Precious Metals → They benefit from falling yields and act as a hedge when monetary policy gets looser.

• Crypto → Crypto thrives on liquidity and a “risk-on” mood usually push digital assets higher.

• Small-Cap Stocks → These firms often depend more on affordable financing, so cheaper money helps them grow.

• Tech & Growth Stocks → Their long-term cash flows look more attractive when the discount rate falls.

• Emerging Markets → A weaker dollar makes debt easier to manage and draws foreign investors back.

It’s basically a weakening of the dollar.

The Fed now expects another 50 bps of rate cuts in 2025, likely two more before year-end.

In the past, when the Fed cut rates when the market is at all-time highs, the S&P 500 gained an average of 14% over the next 12 months.

Still, short-term volatility is likely, with half of those cases starting with negative returns in the first month.

The current Fed cycle is starting to look a lot like the post-LTCM easing of late 1998.

Back then, Greenspan cut rates three times even though markets were strong and there was no recession.

The rebound from the 22% drop that October is still the closest parallel to today’s recovery from the 21% Tariff Tantrum in April.

So, if there’s one lesson, it’s that bull markets don’t end out of nowhere.