Investors seek Fed's view of shaky labor market as rate cut looms

Group 1 - Investors are anticipating the Federal Reserve to signal concerns regarding the weakening U.S. labor market at the upcoming meeting, with expectations for a rate cut for the first time in nine months to support employment [1][2] - The size of the expected rate cut remains uncertain, with a 90% chance of a 25 basis points reduction and a 10% chance of a larger 50 basis points cut [4] - The Fed's potential rate cuts have contributed to record highs in major U.S. stock indexes, with the S&P 500 up 12% so far in 2025, driven by factors such as artificial intelligence, strong corporate earnings, and reduced fears over economic impacts from tariffs [3] Group 2 - Historical data indicates that 60% of the 55 rate reductions since 1990 have been 25 basis points cuts, while 18 instances of 50 basis points cuts typically occurred during or after recessions, suggesting a 50 basis points cut would indicate significant concern for the U.S. economy [5] - Current market expectations suggest nearly 73 basis points of easing by December, indicating a trend towards multiple rate cuts [6] - Recent inflation data showed a 2.9% annual increase in the consumer price index, the largest monthly rise since January, which has made the Fed cautious about potential inflationary pressures from tariffs [7]