The Fed is expected to cut interest rates in 2024. Here's how investors can prepare

cnbc.com:

With U.S. Federal Reserve officials expecting to cut interest rates in 2024, there are steps investors can take now to prepare.

The central bank's latest summary of economic projections, issued in December, indicates three cuts may be coming this year. (This assumes each is a quarter-percentage-point decrease.)

The Fed began raising borrowing costs aggressively in March 2022 to tame inflation. Inflation has since declined significantly from pandemic-era highs, and keeping interest rates too elevated risks tipping the U.S. into recession.

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A cut in 2024 would be the first since the early days of the Covid-19 pandemic, when the Fed slashed them to near zero to bolster the economy. Of course, there's still ample uncertainty over how soon and how quickly the Fed may cut rates this time around.

Here's what financial advisors say that investors need to know.

Falling interest rates are generally a boon for the stock market, advisors said. Among the reasons: Businesses can borrow money more cheaply and are more likely to make big investments in their companies as a result.

However, 2024 is unlikely to see a repeat of stocks' stellar performance from last year, advisors said.

The S&P 500 U.S. stock index rose 24% in 2023 following a year-end rally. That surge was partly forward-looking, reflecting investors' expectations for lower interest rates in 2024.

«The stock market is the great anticipation machine,» said Charlie Fitzgerald III, a certified financial planner based in Orlando,