Here’s how the stock market tends to perform when the Fed cuts rates

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Wall Street investors shouldn’t be so eager for a 50-basis-point rate cut. Just take a look at this chart...

The Federal Reserve is widely expected to cut benchmark borrowing costs for the first time in more than a decade Wednesday afternoon — but can a reduction in rates help improve Jerome Powell’s less-than-stellar stock-market record?

The 66-year-old Fed boss has a losing record on Wall Street as it pertains to the market’s reaction to Fed’s statements and his words. He has had two winning days out of the past 11 meetings, with the only positive gains for the market coming in January when policy makers paused a string of rate increases, MarketWatch’s William Watts has noted, and last month when Powell & Co. set the stage for what is shaping up to be a likely rate cut in 24 hours.

That brings us to the bad news , the greater the magnitude of the rate cut, the weaker the returns over the coming three and six months. However, a quarter-of-percentage point has tended to be a Goldilocks number, resulting in an average return of 3.67% three months later and 5.64% in six months.

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