The Most Dovish Pivot Since the Pandemic

In what many are calling the most dovish FOMC meeting since the pandemic, Federal Reserve Chair Jerome Powell strongly hinted at a December rate cut during today's press conference. The latest inflation data showed core PCE at 2.1% — right on target — while unemployment held steady at 4.1%. Powell emphasized that the Fed's work is largely complete and they now have room to support economic growth. Markets reacted instantly: the S&P 500 jumped 2.3%, Nasdaq gained 3.1%, and the 10-year Treasury yield dropped below 4%. Tech stocks led the charge with NVIDIA, Apple, and Microsoft all up over 4%. Bond traders are now pricing in a 92% probability of a 25bps cut next month, with some even betting on 50bps. The dollar weakened significantly against major currencies, boosting emerging market stocks. This pivot marks the official end of the most aggressive tightening cycle in decades — a cycle that began with emergency rate hikes in 2022 to combat post-pandemic inflation that peaked at 9.1%.

What This Means for Your Portfolio

The implications for investors are massive. Growth stocks, which suffered tremendously during the tightening cycle, are now poised for a major comeback. Small-cap stocks, particularly sensitive to interest rates, surged 5% in afternoon trading. Real estate investment trusts (REITs) and utilities — traditional rate-sensitive sectors — saw their biggest one-day gains in years. Meanwhile, regional banks that were crushed by higher funding costs are breathing a sigh of relief. The cryptocurrency market exploded higher with Bitcoin breaking $108,000 for the first time since May. International markets are celebrating too — European stocks hit all-time highs as the euro strengthened against the dollar. Even gold, which had been under pressure from high real yields, jumped 3% as the opportunity cost of holding non-yielding assets decreased. The message from Powell was clear: the Fed is shifting from inflation fighter to growth supporter, and markets are pricing in multiple cuts through 2026.