Kristina Hooper, Chief Global Market Strategist at Invesco, stated that the recent market correction may be an overreaction, and she anticipates that the Fed's rate cut at the September meeting will not exceed 0.25%. She believes that the recent global market sell-off is an overreaction, and reasons why stocks may have stabilized include, firstly, the Bank of Japan's commitment to a cautious approach to raising interest rates. The Bank of Japan's interest rate hike two weeks ago triggered an international market sell-off, but in order to calm market nerves, the Bank of Japan stated that they will maintain a very cautious stance on further rate hikes in the near future. The unexpected interest rate hike by the Bank of Japan disrupted carry trades. Since the Fed began tightening policy in 2022, the interest rate differential between the US dollar and Japanese yen has been quite large, increasing the potential profit of borrowing yen to invest in dollars. However, the recent hawkish stance of the Bank of Japan has reduced the likelihood of this potential profit. Last week, Bank of Japan Deputy Governor Masayoshi Amamiya stated that due to the sharp fluctuations in domestic and international financial markets, they believe it is necessary to maintain the current loose monetary policy. Secondly, the number of Americans filing for unemployment benefits was lower than expected. Additionally, key technical indicators show that the stock market may have been oversold, such as the Relative Strength Index (RSI), which is a momentum indicator that evaluates whether securities or indices are overbought or oversold. An RSI of 70 or above indicates overbought conditions, while an RSI of 30 or below indicates oversold conditions. The RSI of the S&P 500 index rose above 81 on July 10th, indicating overbought conditions. However, this quickly reversed, with the RSI of the S&P 500 index dropping to 30 on August 5th, indicating oversold conditions. Similarly, the MSCI Global Index rose above 80 on July 16th, then dropped to 27 on August 5th, showing oversold conditions. Since then, the RSI of both indices has returned to normal levels, currently hovering around 44-45. Additionally, bearish sentiment significantly increased last week. Bearish sentiment indicates the market's expectation that stock prices will decline in the next six months, with this indicator spiking by 12.3 percentage points to 37.5% last week. This is significantly higher than the historical average of 31.0% and is at its highest level since 2024. Currently, the earnings prospects for US companies are solid, with 91% of companies in the S&P 500 index having reported their second-quarter earnings, of which 78% exceeded expectations. Earnings prospects are quite optimistic, with an expected year-on-year earnings growth of 10.8% for the S&P 500 index in 2024. Third-quarter performance may be softer, with an expected year-on-year earnings growth of 5.4%, but a significant increase is expected in the fourth quarter. Earnings growth is expected to remain strong in 2025, with a year-on-year growth rate of 15.2%. Hooper believes that the Fed is likely to take a cautious approach to rate cuts. The Fed is not expected to make any emergency rate cuts before the September meeting, as there is no emergency situation that would warrant such action. In fact, if the Fed were to cut rates before the September meeting, she believes it would create significant market unrest. She believes that the Fed's initial rate cuts will be cautious, and she expects the rate cut at the September meeting to not exceed 25 basis points. If the rate cut in September exceeds 25 basis points, it may provoke market unrest, as it would indicate the Fed is more concerned about the health of the economy than before. While it is almost certain that the Fed will cut rates in September, there is current market concern that the July Consumer Price Index report released this week could weaken this possibility. She is highly skeptical of this, as recent overall data suggests that the anti-inflation process is ongoing, notably seen in the wage growth in the July US jobs report, which only saw a 3.6% year-on-year increase. Despite stocks appearing to have stabilized, she believes that tensions have not dissipated, which could lead to increased market volatility and overreactions to data and related developments. She believes that long-term investors who view their investment journey as a marathon rather than a sprint will benefit from this approach.