After a brief jump following the initial announcement, stocks went through a period of highly volatile trading before all three major U.S. market indices ended Wednesday lower.
While no one can know the definitive reason behind stocks' negative reaction to what should have been a market-juicing mega rate cut, Rick Rieder, BlackRock's CIO, touched on one theory.
The market has priced in a rate path that looks more like what an impending recession would require... versus the recalibration of rates to a less restrictive, or neutral, policy evolution.
Thomas Simons, a senior economist at the investment bank Jefferies, echoed this outlook in a note to clients Wednesday, indicating a higher terminal rate in long-run projections.
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