Investors wanted two ponies... But the Fed only gave them one. America's central bank just did something it hasn't done in a decade: Cut interest rates. Fed Chairman Jerome "Jerry" Powell said he's lowering the nation's rates by 0.25%. Doesn't look like much, but the impact is big — if you've got a savings account, car loan, or student debt, this might affect you.
Time-travel back to 2008... That's the last time the Fed lowered rates. With the financial crisis growing, rates were dropped to near zero and stayed there for years to encourage borrowing and boost economic growth. It encouraged us to invest in stocks or other things instead of letting money just sit in savings accounts. This time, the Fed lowered rates for 2 other reasons:
December was the big pivot... For years, the economy's had its post-crisis mojo back, so the Fed had been increasing interest rates since 2015. But in December, the Fed changed its tone (see the 2 reasons above). Since then, investors have pumped up the S&P 500 by 29% on expectations rates would drop — But stocks fell yesterday because investors expected even more rate drops to come. Jerry hinted 1 was enough.