Why Rate Cuts Could Trigger a 'Sell the News' Event for Stocks

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XAU/USD Noticias

S&P 500,NVIDIA Corporation,Occidental Petroleum Corporation

Market Overview Analysis by MarketBeat.com (Gabriel Osorio-Mazzilli) covering: XAU/USD, S&P 500, NVIDIA Corporation, Occidental Petroleum Corporation. Read MarketBeat.com (Gabriel Osorio-Mazzilli)'s latest article on Investing.com

The market has now potentially priced in all the rate cuts the Federal Reserve could issue, creating massive downside potential.

Money and financial markets tend to operate on a forward-looking basis, often shifting by 6-12 months ahead. Most of the mega investors in the market today, from Warren Buffett to Michael Burry and Stanley Druckenmiller, have attributed some of their success to the ability to imagine the world shortly and then figure out which companies will do well in that version of the future.

This uncertainty could create some volatility in the coming days, though the CME's FedWatch tool has now calculated the odds between the Fed's two choices. There is now a 61% chance of a 50bps rate cut and a 39% chance of a 25bps cut. Hecla Mining stock now trades at a new 52-week high, while Occidental Petroleum stock trades at a much lower 72% of its 52-week high. This price action shows both the expectation of a bear market in the coming months as well as a further flight to safety.After NVIDIA stock released its latest quarterly earnings results, the stock sold off from its high to 83% of its 52-week high.

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