The Federal Reserve announced on September 18 that it would lower the target range for the federal funds rate by 50 basis points to between 4.75% and 5.00%. This marks the Fed's first rate cut since March 2020, signaling the start of a rate-cutting cycle.

Rate cuts typically reduce borrowing costs, stimulate investment and consumption, and are positive news for the stock market. However, if the rate cut exceeds expectations, it may raise concerns about the health of the economy. Currently, market expectations for the Fed's rate cut have already been reflected in stock market volatility. For example, the three major U.S. stock indices surged significantly under the influence of rate-cut expectations, posting their best weekly performance since 2024.

While rate cuts may boost market sentiment in the short term, they may also reflect risks of slowing economic growth. Investors should remain cautious when facing this potential positive development and pay attention to changes in macroeconomic data, especially inflation rates and GDP growth, as these will directly influence the Fed's policy decisions. At the same time, investors should develop reasonable investment strategies, allocate assets wisely, and balance returns and risks.