- The stock market rallied Wednesday, the second trading session this week to interrupt the frantic selloff that begin mid-February.
- But that doesn’t mean the selloff is over. A legendary economist and global strategist says this is exactly what happened in the 2008-09 bear market.
- In fact, bear markets are more prone to outlandish, one-day surges in stock prices. This week’s whiplash rallies indicate the bull run is over.
The stock market rallied Wednesday as markets warmed up to the Federal Reserve’s emergency interest rate cut of half a percentage point. The Fed cut interest rates from the 1.50%–1.75% range to the 1%–1.25% range.
By cutting interest rates, which are essentially the price banks charge to lend money from each other, the Fed made it cheaper for businesses and individuals to borrow.
Markets usually react to that news with more confidence and buy stocks, driving up their prices. But it temporarily spooked an already nervous stock market Tuesday.