The Fed Changes Strategy

SP500

Key zone: 6,500 - 6,600

Buy: 6,580 (on strong positive fundamentals); target 6,750; StopLoss 6,500

Sell: 6,450 (after a retest of the 6,500 level); target 6,250; StopLoss 6,530

The rise of the broad market index to new highs reflects a shift in investor expectations: Fed rate cuts are no longer just an analyst forecast but a real scenario. The dilemma now is whether to stick with a symbolic 0.25% cut or move to a sharper 0.50%, which would signal economic weakness.

Yesterday, the S&P 500 and Nasdaq closed at record levels, driven by Oracle’s stock rally and easing inflationary pressure. The softer producer price index reinforced hopes for an imminent Fed policy shift.

Traditional economic statistics are starting to play against the market. Labor market data created a precedent: a downward revision of 911K jobs looks more like a political adjustment than a technical one. This suggests the U.S. economy has been “weakening” for a long time, but statistics masked the reality.

Trump’s supporters are pushing for a 50 bp rate cut to offset the consequences of past policy mistakes. The current administration has no consistent program for crisis management.

The controversial Lisa Cook will remain part of the Fed at the September 16–17 meeting. However, Trump’s attempts to build a more loyal FOMC highlight the “politicization” of the regulator and add risks to the equity market.

Core CPI data will become the Fed’s final argument. An expected 0.3% increase will not prevent a rate cut but could limit the scale of future Fed actions. Now, any positive economic indicator narrows the space for monetary maneuvering.

“Smart money” is already adjusting positions: the tech sector shows resilience, and dividend stocks are strengthening. With Treasury yields swinging, stable payouts are the safest tool.

The market trajectory is now determined not by the nominal rate level but by the Fed’s ability to adapt policy effectively without losing credibility. The first tradable reaction should come from the S&P 500.

So we act wisely and avoid unnecessary risks.

Profits to y’all!