Traders keep their faith in the Federal Reserve

The S&P 500 continues to rise. But the idea that the US Federal Reserve can hold off a recession by rate cuts alone is optimistic.

Traders on the floor of the New York Stock Exchange © Drew Angerer/Getty Images

Investors are always cheered by the thought of interest-rate cuts
(Image credit: Traders on the floor of the New York Stock Exchange © Drew Angerer/Getty Images)

"Bad economic data emerges, stockmarkets fall. Investors then predict an interest-rate cut, and stocks rise," says John Foley on Breakingviews. That familiar pattern played out again last week in the US, when the S&P 500 closed higher even though the latest Institute for Supply Management (ISM) surveys suggested a contraction in the manufacturing sector and a sharp slowdown in services. Yet while it's not entirely a shock that US growth is slowing down after more than a decade of steady expansion, the market's reaction "certainly looks too sanguine".

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Cris Sholto Heaton

Cris Sholto Heaton is an investment analyst and writer who has been contributing to MoneyWeek since 2006 and was managing editor of the magazine between 2016 and 2018. He is especially interested in international investing, believing many investors still focus too much on their home markets and that it pays to take advantage of all the opportunities the world offers. He often writes about Asian equities, international income and global asset allocation.

Cris began his career in financial services consultancy at PwC and Lane Clark & Peacock, before an abrupt change of direction into oil, gas and energy at Petroleum Economist and Platts and subsequently into investment research and writing. In addition to his articles for MoneyWeek, he also works with a number of asset managers, consultancies and financial information providers.

He holds the Chartered Financial Analyst designation and the Investment Management Certificate, as well as degrees in finance and mathematics. He has also studied acting, film-making and photography, and strongly suspects that an awareness of what makes a compelling story is just as important for understanding markets as any amount of qualifications.