Dow Dips: Investors Wait for Fed's 2025 Rate Cut Plans

The Dow Jones Industrial Average has been falling for the longest stretch in over 40 years. Investors are losing hope that the Federal Reserve will quickly cut interest rates next year. The Fed is meeting this week to decide on another rate cut. But investors are unsure how aggressive the central bank will be in 2025, given the economy's momentum and expected policies from the incoming Trump administration. Jerome Powell, the Fed Chair, is likely to announce a rate cut this week. However, the real focus is on his comments and the Fed's economic outlook. The economy seems strong, and inflation is sticky. The incoming Trump administration might push for growth policies that could boost inflation.Investors are jittery because they don't know how to position themselves ahead of the Fed's announcements. The Dow fell 267. 58 points on Tuesday, extending its losing streak to nine days. This is the worst streak since 1978. The S&P 500 and Nasdaq also dipped. Most experts predict a quarter-point rate cut in December. But only 63% think it's the right move. Inflation is currently at 2. 7%, above the Fed's target. Policymakers are expected to lower rates further over the next two years, but there's uncertainty about the impact of Trump's policies on inflation. Economists are divided on whether the incoming administration's policies will be inflationary or not. The economy's strength and potential risks like tariffs and immigration policies are causing concern. A rate cut could lower borrowing costs and boost the equity market. However, the large budget deficit could also push prices higher.