The market is pricing in a recession: The S&P 500 has decreased -2% since Fed rate cuts begin in September 2024. Historically speaking, the S&P 500 gains +1%, on average, in the 6 months after rate cuts begin. In the case of rate cuts during a recession, the S&P 500 declined -6% in 6 months -10% within 12 months. The maximum average drawdown in a downturn scenario has been 15% within 8 months. By comparison, the S&P 500 has rallied +10% within 6 months and +15% within a year on average if a recession was avoided. The Fed has a tough job ahead.