Stock Markets Brace for 2026 Volatility as Fed Rate Cuts Emerge Under Trump

Hedge fund manager and investor Mitchell Feierstein warned Wednesday that Americans should brace for significant stock market volatility in 2026, even as interest rates begin to fall and some economic conditions improve under President Trump’s policies.

Feierstein indicated the Federal Reserve is likely to implement two to three interest rate reductions during next year. “I think next year we’re going to see two to three interest rate cuts, at least,” he stated.

However, Feierstein cautioned that markets would face turbulence. “The markets will have volatility. Think stocks down in the first quarter.”

The hedge fund manager criticized the Federal Reserve’s current dysfunction, tracing its issues to decades of policy drift. He described the central bank as “broken,” arguing it has strayed from its dual mandate of price stability and full employment.

Feierstein noted that recent market performance contradicts many economists’ predictions about economic recovery. Commodities have outperformed equities over the past year, with gold rising 65% and silver climbing 140%, while major stock indexes showed much smaller gains.

“The Fed has kept interest rates too high,” Feierstein added. “We’ve had 40 years of policy mistakes.”

Looking ahead to 2026, Feierstein highlighted employment trends as a key challenge. He pointed to inflated job numbers during the Biden administration and wages that failed to keep pace with inflation. “We had cumulative inflation of 27% during the Biden administration, and wages were nowhere near that,” he stated.

Despite acknowledging signs of improvement in lower inflation and stronger economic growth, Feierstein warned recovery would be gradual. “Nothing’s going to turn around on a dime,” he said.

Feierstein emphasized President Trump’s role as a businessman with policies that must be sustained. He urged Americans to monitor the 10-year Treasury yield, which he predicted would fall as rates are cut, easing borrowing costs for mortgages, credit cards, and business loans.

“That’s the way forward for 2026,” Feierstein concluded. “But the markets will have volatility.”