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Why it’s dumb to buy stocks on the first Fed rate cut of a cycle

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Don’t jump the gun — in track, or in buying stocks based on interest-rate cuts.

The market is increasingly salivating at the prospect that the Federal Reserve may make its first interest-rate cut of the cycle, possibly next month.

The Dow Jones Industrial Average DJIA, +1.14% rallied for three straight sessions and gained ground on Thursday as well, after an array of dovish remarks from Fed officials, including Chairman Jerome Powell.

Read:Powell suggests interest rates could be cut if trade tensions damage economic outlook

David Rosenberg, chief economist and strategist at Gluskin Sheff, points out why that’s not a logical reaction.

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