Despite warnings from some experts that the Fed's bold move to cut interest rates by 50 basis points could bring economic trouble and potential market sell-offs, Wall Street seems to be supportive of larger rate cuts, and US stocks once again reach new highs.

Traders are betting that the Fed will continue its aggressive easing measures. The CME Group's FedWatch Tool indicates that although the Fed hints at two 50 basis point rate cuts in its remaining 2024 meetings, traders are expecting a total cut of 75 basis points.

Some experts point out that it is the cooling of inflation, rather than an increasing risk of economic recession, that has given the "green light" for the Fed to make another significant interest rate cut.

Nationwide Mutual's Chief Economist Kathy Bostjancic explains, "If inflation continues to ease, interest rates should be lowered in line with it. The Fed should cut rates by 50 basis points at the next meeting. They are still far from neutral, so a 50 basis point cut does not necessarily mean that the economy is collapsing. This indicates that the policy has been too tight."

If the past week is any indication, aggressive rate cuts could be the catalyst for the market. Powell emphasizes that the Fed's actions should be seen as "a signal that we are firmly committed to avoiding a downturn", which is enough to boost investor confidence. The S&P 500 index reaches its 39th record high of the year, and the Dow Jones Industrial Average breaks through 42,000 points.

"The Fed is able to cut rates by 50 basis points not because it has to, but because it can, and I think that's a critical distinction," noted Matt Orton, Chief Market Strategist at Raymond James. "It supports more investment, it supports more capital expenditure, and that's the hidden driver behind economic resilience."

Emily Roland from John Hancock points out that investors areBut after the bursting of the internet bubble and the Fed's rate cut in 2001, the ROI dropped by more than 10%.The optimistic sentiment is driving the growth of the overall market sentiment. Risk assets are celebrating the Fed's ability to avoidhard landingand take action proactively before more signs of weakness appear in the labor market.

BMO Capital Markets Chief Investment Strategist Brian Belski has raised the year-end target price of the S&P 500 Index to 6100 points, setting a new high on Wall Street. He pointed out that the historical performance pattern "indicates that the market, especially after the Fed has shifted to a loose mode, may show a stronger trend in the fourth quarter than usual."

Next, two key non-farm payroll reports will help the Fed determine the extent of the next interest rate cut. Michael Pearce of the Oxford Economics Research Institute warned in a report to clients last Friday that further softening of the labor market could prompt the Fed to cut interest rates by 50 basis points early.

"Given the Fed officials' inclination to loosen policy, any negative surprises in labor market data may prompt them to cut interest rates by another 50 basis points in November."