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Fed Cuts Rates 25 Bps, SPY and QQQ Rally Together

The Fed officially cuts rates by 25 bps. Check out how Jerome Powell's decision impacts the movement of SPY and QQQ stocks in your portfolio.

Rendy Andriyanto

Rendy Andriyanto

— 2 min read
Fed Cuts Rates 25 Bps, SPY and QQQ Rally Together

Jakarta, Gotrade News - The Fed officially dropped interest rates by 25 basis points during Wednesday's trading session. This move instantly acted as a green catalyst for the SPDR S&P 500 ETF Trust and the Invesco QQQ Trust.

Keytakeaways:

  • The Fed cut interest rates by 25 bps, pushing a rally for SPY and QQQ ETFs.
  • Jerome Powell is adopting a "wait and see" approach regarding the next rate cut policy.
  • US GDP projections for 2026 are raised to 2.3 percent with inflation cooling down.

According to a report from TipRanks, nine FOMC members voted in favor while three others dissented. This split vote highlights some pretty sharp internal debates about where monetary policy is heading next.

Economic Projections and The Fed’s Stance

The Fed also updated their economic projections regarding US GDP and inflation expectations for 2026. The Summary of Economic Projections data reveals the central bank’s optimism towards economic growth.

  • GDP growth is expected to climb up to 2.3 percent.
  • PCE inflation is projected to land at the 2.4 percent level.

Fed Chair Jerome Powell stated that the central bank is taking a "wait and see" approach before making their next move. During the press conference, he emphasized that risks to inflation and employment are still overshadowing the current economy.

Market Sentiment and Leadership Transition

Market players are now predicting the Fed's next move using probability data from the CME FedWatch Tool. The tool currently shows a 77.9 percent chance that rates will be held steady at the upcoming January meeting.

Investors are also starting to eye the potential appointment of Kevin Hassett as Powell's successor, whose term ends in May 2026. Hassett signaled to the media that the room for further rate cuts is still wide open.

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Disclaimer:

Gotrade is the trading name of Gotrade Securities Inc., registered with and supervised by the Labuan Financial Services Authority (LFSA). This content is for educational purposes only and does not constitute financial advice. Always do your own research (DYOR) before investing.

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