Markets Misread Powell, Goldman Analyst Says, Expects Consecutive Fed Cuts

Federal Reserve Chair Jerome Powell framed Wednesday’s quarter-point rate cut as a “risk management” move, sparking market concerns, according to MarketWatch. He also pushed back against a half-point reduction supported only by the new governor, Stephen Miran. Goldman Sachs economist David Mericle said markets may have misinterpreted Powell. He pointed to the Fed’s dot plot favoring three cuts in 2025, the dovish labor market language, and Powell’s acknowledgment that the job market is cooling off. Mericle also noted that insurance cuts typically come in consecutive moves and that Powell emphasized following the expected path of rates, signaling the likelihood of another cut in October. The S&P 500 slipped 0.10% Wednesday but closed at its third-highest level ever. Futures rose 0.74% Thursday, and the 2-year Treasury yield fell four basis points to 3.53%.