#FedRateCutAffectsDollarTrend Stock Market Sensitivity: Foreign investors also invest heavily in U.S. equities (stocks). When the Fed cuts interest rates, the initial reaction may be a boost to the stock market because lower rates can stimulate economic activity and increase corporate profits. However, this effect is temporary. Over time, as interest rates remain low, foreign investors may become concerned about the long-term health of the U.S. economy and its equity market, especially if low rates signal economic weakness.