Weighing the Cost of Additional Cuts

After shedding more than 3900 points or -13.4% in seven trading days, the DOW has rebounded sharply, gaining back over 1000 points. Other major indexes are experiencing a similar upward movement. The reason for the rally is the widely-held belief that Fed officials are suddenly willing to rescue the floundering U.S. stock market. It isn’t clear how a rate cut or a series of rates cuts will bolster domestic economic growth in the face of a global virus outbreak, but the market carnage has been severe, and central bankers are the only available fix.

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