The Fed just opened the door to amazing gains in stocks

Today, the US Federal Reserve officially began its first rate-cutting cycle in four long years – and with a “buck,” no less.

In our view, this bold move opens the door for stocks to spend like it’s the 1990s all over again.

The big news here, of course, is that the Fed cut interest rates by 50 basis points (bps). That’s unusual. The central bank typically cuts in 25 basis point increments. Jumbo 50bp moves are rare, usually reserved for when the Fed wants to really support the economy.

In other words, with today’s jumbo cut, the central bank is making it clear that the US economy has its full support.

Indeed, in the updated Summary of Economic Forecasts, the Fed indicated more rate cuts this year…more rate cuts next year…and more cuts the year after. In total, the Federal Reserve projects another seven to eight interest rate cuts over the next two years.

And in the bank’s post-meeting press conference, Fed Chairman Jerome Powell sounded very accommodating. He expressed that if the economy starts to weaken unexpectedly, the Fed will cut interest rates even more aggressively than forecast.

Between that dove, the rate projections, and this initial jumbo cut, the Fed has proven it will do everything possible to help the economy regain its strength in the next few years.

We believe that is exactly what will happen.