Investing.com -- The Federal Reserve's decision to cut interest rates by 50 basis points has sparked a strong movement in the markets, but many wonder what the much-anticipated dovish shift means beyond the near-term reaction.
Cyclical sectors, including energy, materials, consumer discretionary, and industrials, are expected to outperform, while technology may lag in the near term. “I say that confidently because the Fed cutting in time would create this macroeconomic outcome: 1) Falling yields, 2) Continued very strong earnings growth, 3) Positive economic tailwinds, 4) The prominent existence of the Fed put and 5) Expectations of accelerating growth in the future,” President of Sevens Report wrote in the note.
As the markets digest the Fed's moves, future economic data will become crucial in determining whether the central bank’s policy was effective.