The Fed could spark a 'Santa Rally' for stocks to end the year

Core Viewpoint - The Federal Reserve is expected to potentially implement a "hawkish cut" in interest rates, which may create volatility in financial markets and impact the anticipated "Santa Rally" for Wall Street investors [1][2][3]. Group 1: Federal Reserve Actions - The Federal Reserve is set to meet to discuss a potential third consecutive interest rate cut, with expectations of a quarter-point reduction [4]. - There is a division among Federal Open Market Committee members regarding the rate cuts, with some concerned about a weakening labor market while others prioritize preventing inflation from becoming entrenched [5]. Group 2: Market Reactions - Financial markets experienced a decline as investors awaited the Fed's decision, with the Dow Jones Industrial Average falling by 0.2% (over 200 points) and the S&P 500 dropping by approximately 0.4% (about 30 points) [3]. - The potential for a "Santa Rally" hinges on the Fed's actions, which could either support or disrupt market momentum as Wall Street remains near record highs [1][3].