Similar 'adjustments' by the Federal Reserve in the 1990s led to boom times for stocks

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The central bank made 'midcycle adjustments' in 1995 and 1998, cutting rates three times to combat the economic downturn.

Safe-haven Treasurys sold off in the meantime, with futures on the 10-year note losing more than 6% in the one year after the first cuts in 1995 and 1998. Gold performance was flat back then, whereas the greenback rose more than 5% on average.

Those comments from Powell caused the Dow to drop more than 300 points on Wednesday. But perhaps traders were reassessing the move on Thursday as stocks bounced back with the Dow up nearly 200 points.

 

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But we are not in a downturn.

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