A Federal Reserve rate cut is anticipated at the September FOMC meeting scheduled for September 17 and 18, but its impact on markets (^DJI, ^IXIC, ^GSPC) remains uncertain. Envestnet Solutions Co-CIO and Group President Dana D’Auria joins Wealth! to discuss her outlook as markets enter a period of uncertainty.
D’Auria emphasizes that the upcoming jobs report will be crucial, noting that Fed Chair Jerome Powell has essentially guaranteed a September interest rate cut in his Jackson Hole speech in August.
“When you get that kind of dovishness, the market thinks ‘Wow, maybe it’s a 50-basis-point [cut], not a 25.'” The jobs report, she suggests, will help investors gauge the potential magnitude of the rate cut. However, D’Auria tells Yahoo Finance, “Either way, I’m not expecting a 50-basis-point cut.”
She advises investors to consider a key question: “Are these rate cuts coming because it’s just time… or is it coming because we kind of already are looking out and anticipating some weakness?” D’Auria points out that if weakness is expected, a 25-basis-point cut may not be sufficient, as it has already been priced into markets.
Regarding current investment strategies, D’Auria recommends focusing on “more value-y areas of the market” for long-term growth, such as small-cap stocks (^RUT). However, she stresses that there are no guarantees, and outcomes depend on the economic landing.
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