Mouvements suite à l’annonce de Powell

🧩 What actually happened

• The Fed cut rates by 25 bps (to 3.75–4.00%) — the first cut of the cycle — which markets had partly priced in.

• However, Powell’s tone was not dovish enough for traders expecting a clear rate-cut cycle.

• His remarks that “December is not locked in” and that the Fed remains “data-dependent” and “not on a preset path” signaled uncertainty rather than a commitment to continued easing.

📉 Why the S&P 500 fell sharply at that moment

1. Disappointment vs expectations

   • Markets expected not just a 25 bps cut, but also a strong signal of further easing.

   • Powell instead implied caution, saying inflation remains above target → investors interpreted this as “the Fed might pause again.”

2. “Bad news is bad news” tone

   • The Fed cut because the economy is weakening (labour market softening, unemployment rising).

   • That’s not “stimulus” optimism — it’s concern about slowing growth. Equities dislike that implication.

3. Algorithmic reaction

   • Once Powell’s phrasing hit the wires (news algos scrape key terms like “not on preset path” / “data-dependent”), automated trading systems likely dumped equities, pushing the S&P lower in seconds.

   • The timing — roughly 11:30 AM ET — matches when Powell’s press Q&A or prepared remarks were disseminated through Bloomberg and Reuters terminals.

4. Bond market re-pricing

   • Yields may have snapped higher after the “no preset path” comment — because that reduces expectations for future cuts.

   • Higher yields → lower equity valuations → instant sell-off.

📊 Market interpretation summary

→ Net result: short-term disappointment → sell-off.

🧠 Big picture takeaway

This is a classic “buy the rumor, sell the news” moment:

• Markets rallied into the Fed cut, pricing in a full easing cycle.

• When Powell didn’t fully commit, traders locked in profits.

• Now, focus shifts to upcoming inflation and jobs data — each release can swing markets sharply because the Fed made policy explicitly data-dependent.