NEPC’s Phillip Nelson was recently quoted in MarketWatch’s coverage of the Federal Reserve’s first rate cut of 2025, sharing insights on how investors can position their portfolios in response. Visit MarketWatch to read the full article.
The countdown is almost over. In a few hours, the Federal Reserve will announce whether it’s finally ready to lower interest rates for the first time in nearly a year, potentially ending a long pause in monetary policy that could steer growth, inflation and financial conditions in the world’s largest economy.
But for financial-market investors, the biggest question is how markets will react once the easing cycle resumes and, more importantly, what it means for their investment portfolios.
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“At least for the last month, the stock market has clearly been buying the rumor of what the Fed is going to do, that a cut will start in September and how many more cuts we will get for the rest of the year, so I don’t think there’s that much exuberance that we’re going to get from anything the Fed does on Wednesday,” said Phillip Nelson, partner and head of asset allocation at NEPC.
“Investors don’t need to make a lot of changes regarding portfolio positioning since we are still waiting for some clarity from the Fed, or for the economy to give a clear indication of the direction it is moving in,” Nelson told MarketWatch in a phone interview on Tuesday.
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“The economic projections from the Fed on Wednesday will give a little more color than they otherwise would in terms of the direction that we might see for small caps,” Nelson said. “But it’s still a tough environment where there are only five to 10 stocks in the U.S. that are really driving the market, so small caps may have to wait in the shadows for a bit longer to have their day, and I don’t see that turning too quickly,” he added.
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