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Will Powell Hint At 100bps Cuts And Ignite A Bull Run? (NYSEARCA:SPY)

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  Published in Stocks and Investing on Monday, September 8th 2025 at 14:54 GMT by Seeking Alpha
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Could Jerome Powell’s Next Speech Spark a 100‑Basis‑Point Cut and a New Bull Run?
– A Deep Dive into the Fed’s Current Signal, Market Reactions, and What It Means for Investors –

The Federal Reserve’s tone has long been a barometer for global financial markets, and investors are currently bracing for a potentially decisive moment in Washington. The question on every trader’s mind is whether Fed Chair Jerome Powell will signal a 100‑basis‑point (1 %) reduction in the policy rate—a move that could ignite a fresh rally in equity markets. The article in question takes a close look at the evidence, the economic backdrop, and the possible fallout for the stock market, offering a nuanced view that balances optimism with caution.

1. Why a 100‑Basis‑Point Cut Matters

A 1 % rate cut is a substantial shift, especially given that the Fed’s benchmark rate is now hovering around 5.25‑5.50 %. Historically, such a move has served as a catalyst for the S&P 500, the Nasdaq, and even the broader bond market. Investors have been pricing in incremental cuts of 25–50 bp each quarter, but a 100 bp reduction would signal that the Fed believes the economy can handle a sharper loosening—potentially signaling a shift toward the “policy‑end” phase of its tightening cycle.

2. Powell’s Recent Communications: A Mixed Signal

Powell has been carefully navigating a tightrope between the Fed’s dual mandate—maximum employment and price stability—and the geopolitical uncertainties that continue to weigh on the economy. In his latest remarks before the House Financial Services Committee, Powell reiterated that inflation remains the prime focus but also acknowledged that the labor market is still robust. He emphasized the Fed’s willingness to “accelerate” policy easing if data support it.

However, the language is deliberately vague. Instead of stating a definitive “rate cut next quarter,” Powell framed the potential move in terms of “the data will dictate.” This ambiguity has led market participants to interpret the speech as an opening door for a significant cut, especially when paired with the Fed’s recent decision to taper its asset‑purchase program.

3. The Macro Environment: Inflation, Employment, and Growth

Inflation: The consumer price index (CPI) has slowed from the double‑digit highs of last year, but still sits above the Fed’s 2 % target. Core inflation—excluding food and energy—remains in the low‑to‑mid‑2 % range. Economists expect a gradual decline in inflation over the next 12–18 months, but the persistence of supply‑chain bottlenecks and labor shortages could keep it above target longer.

Employment: The labor market remains tight. Unemployment is at a 50‑year low of about 3.5 %, and the job growth figure is still solid. Employers are signaling that wages are rising, which could continue to support consumer spending even if rates are cut.

Economic Growth: Real GDP growth has slowed from the 6 %+ pace of the first half of 2023, but is still projected at around 2.5 % in 2024. The consensus is that the economy is moving toward a “soft landing” rather than a hard recession.

4. How the Markets Have Been Pricing in the Cuts

Looking at the Treasury curve, the 2‑year/10‑year spread widened from an inverse 100 bp in late 2023 to a more favorable 200 bp today, suggesting that investors are already pricing in rate cuts. Meanwhile, the S&P 500 futures are trading in a range that reflects an implied 3.5 % annualized return, a figure that would rise if a 100 bp cut were announced.

Analysts point to the “Fed‑rate‑cut risk premium” that has been eroding as expectations shift from “gradual easing” to a more rapid acceleration. If Powell were to confirm the 100 bp reduction, bond markets would likely see a steepening of the curve, while equities—especially high‑growth tech stocks—could receive a substantial boost.

5. Potential Bull Run: What It Looks Like

If the Fed does signal a sharp cut, the impact could ripple across several asset classes:

• Equities: The Nasdaq Composite could climb 15–20 % in the short term, with technology and consumer discretionary stocks pulling most of the gains. The S&P 500 could see a rally of 10–12 %, as the lower rates would improve corporate valuation multiples and boost consumer spending.

• Fixed Income: Yields on 10‑year Treasury bonds could fall 30–50 bp in the first few weeks, lifting bond prices. This would also reduce the cost of borrowing for companies and households.

• Commodities: Lower rates typically translate into weaker U.S. dollar values, which often lift commodity prices. Oil and metals could see a modest rebound.

• Foreign Currencies: A U.S. rate cut would likely weaken the dollar relative to other major currencies, creating opportunities for currency traders.

6. Risks and Caveats

While the potential upside is attractive, the article cautions against over‑optimism. Several risks could temper the rally:

• Inflation Resurgence: If inflation accelerates unexpectedly, the Fed may hold rates higher than anticipated, nullifying the bull‑run expectation.

• Geopolitical Tensions: Escalating conflicts or supply‑chain disruptions could put downward pressure on growth.

• Credit Market Stress: Banks may tighten lending standards, which would dampen corporate earnings and consumer spending.

• Unexpected Policy Moves: The Fed might opt for a gradual approach, issuing a 25‑50 bp cut instead of 100 bp, or it could pause the tapering of its asset‑purchase program.

7. Bottom Line

Jerome Powell’s next speech is poised to be a market‑making event. The Fed’s careful language leaves room for interpretation, and a 100‑basis‑point cut could spark a robust rally across equities, bonds, and commodities. However, the macro backdrop—persistent inflation, a tight labor market, and supply‑chain issues—remains a source of uncertainty. For investors, the key is to monitor the Fed’s signals closely while maintaining a balanced portfolio that can weather volatility.

In essence, the market’s pulse is quickening. Whether Powell’s message will be a green light for a massive rate cut—and whether that will indeed ignite the next bull run—remains to be seen. The next few weeks will be critical, and every dollar of data will count.