Do we really need rate cuts?

June 12, 2026

We can always tie a market pullback to a number of different stories. Sometimes the market simply needs a breather.

After a 10-week rally, that may have been part of what happened this week.

But here’s my take…

Stocks pulled back late last week and into the middle of this week before finding support near the 50-day moving average.

At the same time, we received another round of economic data that, in my opinion, was  positive.

Last week, the U.S. economy added 172,000 jobs, beating expectations. Unemployment remained low at 4.3%.

That’s good news.

The problem? Strong economic data means the Federal Reserve is likely in no rush to cut interest rates. Add in inflation numbers that came in a little higher than expected, and investors immediately began selling stocks aggressively as immediate Fed rate cuts seem unlikely.

Personally, I’m not sure that’s a bad thing.

I’d much rather see a strong economy with slightly higher inflation than an economy that is weakening and forcing the Fed to cut rates in response.

To be clear, inflation still matters. If it runs away, that’s a problem. But modest inflation alongside economic growth is very different than rapidly falling inflation caused by a slowing economy.

When I look at the big picture, I like what I see in terms of economic data.

My guess is investors initially focused on what the data meant for interest rates. After a few days they shifted their attention back to what the data was actually saying about the economy.

That’s one reason I think stocks found their footing and rebounded later in the week.

As investors, it’s important not to get too caught up in a few days of market movement. Sometimes a pullback is just a pullback. And sometimes the market needs a reminder that a strong economy is still a pretty good thing.