Here’s how stocks historically perform after Fed rate cuts when trading near record highs

Group 1 - The Federal Reserve has resumed its rate-cutting cycle, which is expected to positively impact the U.S. stock market trading near all-time highs [1] - Historically, when the Fed has cut rates while the S&P 500 was within 3% of an all-time high, the market has averaged a 13.0% increase over the following 12 months, with 93% of instances resulting in positive returns [2] - In periods without a recession, the average 12-month return for the S&P 500 increased to about 18%, with all 21 instances producing positive results, indicating a bullish outlook [3] Group 2 - The U.S. economy showed growth in the second quarter, with real GDP increasing at an annual rate of 3.3%, and the third quarter is also estimated to be expanding at the same rate [3] - The S&P 500 index has risen 12.9% in 2025, achieving multiple all-time highs, with the latest record close occurring recently [4] - Despite concerns about the market being stretched, the current bull market is supported by cyclical leadership, although overbought conditions may suggest a potential cooling off, presenting a tactical opportunity to buy the dip [5]