Why today's Fed cut could be one of the most stock-friendly ever

[FOMC text cube block wooden Federal Open Market Committee fed business financial economy government investment monetary rate debt fund loan interest united state america usa policy stack inflation]
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Wall Street is bracing for the Federal Reserve’s highly anticipated policy decision this afternoon, with traders and investors watching closely for confirmation of a widely expected rate cut.

Market consensus points to a 25-basis-point reduction, which would bring the benchmark federal funds rate down to a target range of 3.75%-4.00%. The move would mark a continuation of the central bank's policy easing that was kicked off in September.

Due to the ongoing U.S. government shutdown, the Fed has been bereft of the economic data that it usually relies on to monitor its dual mandate of stable prices and maximum employment. Still, a delayed inflation report published earlier this month supported a rate cut.

Historically, such rate adjustments have proven constructive for equities. Ryan Detrick, chief market strategist at Carson Group, noted that in each of the past 21 instances when the Fed lowered rates while the S&P 500 (SP500 [https://seekingalpha.com/symbol/SP500]) was within 2% of an all-time high, the benchmark index was higher one year later—21 out of 21 times.

That historical trend is adding optimism to today’s Fed decision. The S&P 500 has been on a stellar run, having advanced a whopping +42.5% from its April intraday low and, in the process, notching 36 record highs in 2025.

Should the Fed proceed as expected, investors will be watching to see if history once again favors the bulls.

See below a visual chart provided by Carson Group outlining the historical data after a rate cut took place within the 2% all-time-high threshold:
[Carson Group]
FOMC rate cut history (Carson Group)

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