Bank of America warns: Fed's dovish rate cuts could end the stock market rally

Jinse Finance reported that Bank of America strategists have warned that if the Federal Reserve adopts an overly cautious stance on the economic outlook, it could jeopardize the year-end stock market rally. As the S&P 500 index approaches its all-time high, investors are hoping for the ideal scenario—a Fed rate cut accompanied by falling inflation, while the economy remains resilient. However, Bank of America strategist Michael Hartnett pointed out that if the Fed sends a dovish signal at next week’s meeting, this optimism will be put to the test, as it may suggest the economic slowdown is greater than expected. Hartnett wrote in his report: “The only thing that could kill the ‘Santa rally’ is a dovish rate cut triggering a sell-off in long-term bonds.” He was referring to longer-term U.S. Treasuries.