As you know, the likelihood that the Fed will begin to cut rates in the near future (most likely in July) has increased markedly. Reduce or not reduce, a moot point. Whether or not the recession phase has set in, opinions are also divided.
We are more interested in how the stock market behaved in previous cases, when the rate began to decline in the absence of a recession. It is these data on the US stock market that are shown in the table above.
So, regardless of the period elapsed after the first decline, the index’s return was positive on different horizons, from 1 to 24 months. Here, as usual, it is worth warning that 6 cases are not the sample that guarantees the repetition of the result. But at least one should not expect a collapse if, in the current situation, the Fed nevertheless follows the expectations and starts a cycle of lowering rates.