The impact of interest rate cuts is

1. **Market Expectation Adjustment**: The Federal Reserve usually cuts interest rates when the market expects an economic slowdown or recession risk. The formation and adjustment of interest rate cut expectations can affect investor sentiment and behavior, thereby impacting the stock market.

2. **Decline in Discount Rate**: Interest rate cuts mean lower borrowing costs, reducing corporate financing costs, which helps improve corporate profitability and may drive stock prices higher.

3. **Change in Investor Risk Appetite**: Interest rate cuts typically lower the risk-free rate, making fixed-income assets less attractive. Investors may then turn to the stock market for higher returns, increasing demand for stocks.

4. **Economic Stimulus**: Interest rate cuts are a tool used by central banks to stimulate the economy. By lowering interest rates, they encourage consumption and investment, potentially driving economic growth and improving corporate profits, thereby supporting the stock market.

5. **Monetary Policy Signal**: The Federal Reserve's decision to cut interest rates sends a signal of monetary easing to the market, which may boost market confidence and have a positive impact on stocks.

6. **Asset Price Revaluation**: Interest rate cuts alter investors' expectations for future cash flow discount rates, potentially leading to a revaluation of asset prices. This is especially true for highly leveraged or high-growth companies, whose stock prices may rise due to the rate cuts.

7. **Style Rotation**: Interest rate cuts may affect the performance of different sectors. For example, growth stocks may perform better during preventive rate cuts, while value stocks may outperform during recessionary rate cuts.

8. **Exchange Rate Fluctuations**: Interest rate cuts may lead to a depreciation of the U.S. dollar, which significantly impacts dollar-denominated assets and the profits of multinational corporations. It also affects international investors' decisions regarding U.S. stocks.

9. **Inflation Expectations**: Interest rate cuts may influence market expectations for inflation. In some cases, the market may worry that rate cuts could stimulate inflation, which could negatively impact stocks.

10. **Market Volatility**: Changes in interest rate cut decisions and expectations may increase market uncertainty and volatility. In the early stages of rate cuts, the market may experience fluctuations due to uncertainty, but volatility may decrease as the policy path becomes clearer.