Fed Initiated 50 bps Rate Cuts on Sept 18, 2007, Sparking SPX Rally

Sep 16, 2024, 06:09 AM

The Federal Reserve initiated a rate-cutting cycle on September 18, 2007, reducing the federal funds rate by 50 bps from 5.25% to 4.75%. This move was part of an effort to mitigate the economic downturn that preceded the Great Recession. Following the rate cut, the S&P 500 (SPX) rallied, gaining approximately 6% from the close on September 17 to a high of 1565 on October 9, 2007. This high remained untouched until 2013. The rate cut marked the beginning of a series of monetary policy adjustments aimed at stabilizing the economy.