By Catherine Brock,Contributor

Copyright forbes

The market expects the Fed to lower interest rates Wednesday, September 17.

Stock prices fell slightly in trading Tuesday as investors await the Fed’s latest interest rate decision, to be announced Wednesday.

The large-cap S&P 500 index and the technology-focused Nasdaq Composite fell 0.3% while the Dow Jones Industrial Average, focused on blue-chip stocks, dipped 0.4%.

The federal funds rate has remained above 3% since October 2022, after remaining below 3% for more than a decade. Higher federal funds rate generally mean higher rates on loans to consumers and businesses. More expensive debt can restrict business growth opportunities, so interest-rate reductions tend to benefit stock prices.

The market, weary of extended high interest rates, expects a rate reduction today. The most likely outcome is a 0.25-point reduction, but a larger 0.50-point cut is possible.

Stock futures are mixed ahead of the market open on Wednesday. Futures tracking the S&P 500 are down 0.03%. Contracts tied to the technology-focused Nasdaq 100 are down 0.04%. And Dow Jones futures are up 0.05%.

Investing & Economic News To Watch Today

The Fed will announce its rate decision at 2 p.m. Eastern Time. Fed Chair Jerome Powell will also hold a press conference and present the Fed’s latest dot plot. The dot plot depicts the interest rate outlooks of FOMC members, which helps investors understand how rates may evolve going forward. The dot plot is released quarterly.

Other economic and financial news releases on the calendar for September 17 include:

Housing starts

Building permits

General Mills, Inc. (GIS) earnings report

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Today’s Trading Lesson

Can you handle the next big crash? Stock prices can fall dramatically, quickly or over time. For example, in October 1987, the S&P 500 fell 20.5% in one day. Over the course of 2008, the same index dropped 37%.
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Those two occurrences are extreme, but not unusual. Since 2000, the S&P 500 has lost value in six out of 24 years, including three consecutive years between 2000 and 2002 and an 18.1% pullback in 2022. The point is, if you have money in the stock market, you should expect to face periods of turbulence and falling stock prices.

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More importantly, you should prepare for those volatile times. How you respond to market crashes and corrections can make or break your investment results.

Writing down your crash action plan is an effective preparation method. Doing so allows you to make decisions while your head is clear—not while you’re panicking because your wealth seems to be disappearing.

Crash Action Plan

A market crash action plan might look like this:

Find out what’s happening. Stocks can crash for different reasons. Maybe stocks are generally overvalued, and investors have lost their appetite for risk. Or maybe the economic outlook has worsened. Do some research to learn what’s behind the downturn. If the issues are rooted in sentiment and not business conditions, the problems are more likely to be short-lived.

Review holdings for high-risk positions. High-risk positions can fall out of favor with investors permanently or experience anemic business results during an economic decline. Identify if you own any speculative stocks and, if so, how much wealth you have tied up in them.

Decide to hold or sell high-risk positions. If you are a long-term investor, holding your portfolio intact is often the safest strategy during a market downturn. But there can be exceptions. You may not want to keep those stocks that are unlikely to recover. Evaluate them individually to decide if your money will be better deployed elsewhere.

Find the bargains and keep investing. Stock market crashes create opportunities to pad your share count at lower per-share prices. Opt for high-quality stocks with proven resilience during tough times. Reliable dividend-payers are among the easiest to own in a downturn. They’ll have higher yields due to the lower share prices. Plus, the cash payouts can feel like windfalls when your account value is shrinking.

Tune out the financial news. Once you have a go-forward strategy, there may be nothing to do but continue investing while you wait for the market to recover. For many investors, this is the most challenging time. The onslaught of negative financial news can prompt you to doubt your plan or encourage you to cut your losses by selling out. If you’re at risk of being swayed from your strategy, take a break from the headlines. Remember that the market has always recovered, even from the worst of times.

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