The Federal Reserve announced a 25-basis-point cut to the federal funds rate, bringing the target range to 3.75%-4.00%, in line with market expectations. Max Stainton, Senior Global Macro Strategist at Fidelity International, noted that the Fed's adherence to a preventive easing path signals a policy shift toward supporting the labor market, particularly amid recent funding market pressures.

Resilient consumer spending and robust investment have contributed to more balanced US economic growth, alleviating concerns of a sharp slowdown. Consequently, Fidelity has upgraded its stance on US equities to "overweight." Stainton added that data gaps may obscure underlying economic weakness and amplify slowdown risks, potentially prompting further Fed rate cuts. An early halt to quantitative tightening (QT) also reflects a dovish tilt, though uncertainty remains due to potential Fed commentary during government shutdowns.

Looking ahead to next year, with a new Fed chair and a more dovish voting committee, the easing trajectory is expected to become clearer. While US inflation remains above 2%, the Fed's focus on downside risks supports valuations and sustains optimism. Progress in trade negotiations and corporate earnings further bolster equity valuations, reinforcing the "overweight" call.

Current stock prices already reflect tailwinds such as improving economic prospects and Fed rate cuts. As earnings season unfolds, investors are advised to focus on high-quality fundamentals, combining global dividend strategies with premium bonds to identify long-term opportunities across markets.