Why stocks don’t need Fed rate cuts to keep soaring in 2024

• Stocks don’t need the Fed to cut interest rates to keep soaring, according to investing billionaire Ken Fisher.

• The Fisher Investments founder pointed to the stock market’s run-up in 2023, despite no rate cuts that year.

• That’s a sign there are more important levers pushing stocks higher, he said to investors.

Stocks actually don’t need the Federal Reserve to lower interest rates in 2024 to keep soaring, according to Ken Fisher, the billionaire founder and co-CIO of Fisher Investments.

While markets are still betting that long-awaited cuts will transpire before the end of the year, investors actually have a misunderstanding of how interest rates affect different areas of the economy, Fisher said in a recent video sent to his firm’s clients.

Fisher pointed to the strength in stocks in 2023, when the S&P 500 soared more than 20% after hitting a bottom in October 2022. Meanwhile, the economy has continued to remain resilient, with GDP growing 3.1% over the fourth quarter, per the Commerce Department’s latest estimate.

That all happened irrespective of interest rate cuts in the economy, Fisher said, suggesting there were more important levers driving the market.

“You don’t need rate cuts. The back half of 2022 and 2023 showed that,” he added.

According to Fisher, investors have likely already priced in the impact of Fed rate cuts into the market anyway, given how widely discussed the Fed’s policy moves are. Markets are betting on a 60% chance the Fed could cut interest rates at least 100 basis-points by the end of 2024, according to the CME FedWatch tool.

“[Rates] don’t have the effect on the overall economy, and by extension then, the stock market that many people think,” he said, noting that GDP actually accelerated over the last two quarters despite higher interest rates in the economy. “Interest rates are just one mechanism of a very large system.”

Investors have been anxiously waiting for high interest rates to come down for the last year. Central bankers hiked…