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Markets expect Fed to slash rates by 100 bps

|About: Financial Select Sector SPD... (XLF)|By: , SA News Editor

Traders now expect the Fed to cut rates by 100 basis points at its March meeting, which would bring the Federal Funds target range to 0%-0.25% from 1.00%-1.25% currently.

The CME FedWatch Tool puts the probability of a 1 percentage point rate cut at 86.7% vs. 50.2% a day ago and 0% a week ago.

Bank stocks reflected that expectation in trading today, with the Financial Select Sector SPDR ETF (NYSEARCA:XLF) sinking 11%.

Wells Fargo (NYSE:WFC), off 16%; Morgan Stanley (NYSE:MS), down 15%; and Citigroup (NYSE:C), -15%, suffered the most damage among the U.S.-based megabanks.