EDITOR'S NOTE
Let's hope the Federal Reserve is indeed done cutting rates.
Three rate cuts historically precede a stock market rally, writes CNBC's Maggie Fitzgerald. But more than three reductions could portend a recession.
In the chart below, look at what happened in 1996 and in 1998, after three rate cuts, and in 2001 and 2007 after more than three.
Clearly, the third time is the charm, if there's any charm at all in a slowing economy.
The nation's gross domestic product growth slowed to 1.9% in the third quarter, down only slightly from 2% in the second quarter, and it was not as bad as the forecast for only 1.6% growth.
As expected, the Federal Reserve announced a third 25 basis point cut on Wednesday and changed some key language in its policy statement from "act as appropriate" to "access the appropriate path." Fed Chairman Jerome Powell said the central bank would need to see a "really significant" rise in inflation before hiking rates.
The stock market rose on the news.
If the three-cut trend repeats, stocks could be headed higher still.
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