Dow +0.57%, Nasdaq -0.32%: How Wall Street Responds to the Fed's Rate Cut

[Ben Graham]

Wall Street Shows Mixed Results

US stock markets closed with mixed dynamics on Wednesday after the Federal Reserve announced a widely anticipated rate cut of 25 basis points. Despite the predictable decision, remarks from Fed Chair Jerome Powell added uncertainty to the trading session.

Labor Market Concerns Overtake Inflation Risks

The central bank signaled that it plans to continue easing monetary policy gradually through the end of the year. Policymakers emphasized growing weakness in the labor market, which they now view as a more pressing challenge than inflation. The Fed's forecast includes two additional quarter-point cuts in the coming months.

Market Reaction

Against this backdrop, the Dow Jones Industrial Average advanced by 260 points, or 0.57 percent, closing at 46,018.32. Meanwhile, the S&P 500 edged down by 0.10 percent to 6,600.35, and the tech-heavy Nasdaq fell 0.32 percent, finishing at 22,261.33.

Political and Personnel Moves

On Tuesday, Stephen Miran was sworn in as the new head of the Federal Reserve. At the same time, a US appeals court rejected President Donald Trump's attempt to dismiss Fed governor Lisa Cook.

Nvidia Hit by Chinese Pressure

Nvidia weighed on the Nasdaq after its shares slid 2.6 percent. The drop followed reports that China's internet regulator instructed major domestic tech firms to purchase all available AI chips produced by the US semiconductor giant.

Investors Stir the Market

Shares of Workday jumped 7.2 percent after news broke that activist hedge fund Elliott Management had acquired more than 2 billion dollars worth of stock in the human resources software provider.

Lyft Surges, Uber Slides

Lyft shares climbed 13.1 percent following reports that Waymo, Alphabet's self-driving unit, will launch autonomous taxis in Nashville next year in partnership with the ride-hailing company. Rival Uber, meanwhile, saw its stock drop 5 percent.

Market Uncertainty After Fed's Move

Global markets on Thursday showed signs of turbulence after the Federal Reserve cut interest rates for the first time this year. The central bank stressed a cautious approach to further easing, leaving investors uncertain about the pace of upcoming policy steps.

Mixed Signals in Asia

The MSCI index of Asia-Pacific stocks outside Japan slipped 0.1 percent, pressured by losses in Australia and New Zealand, while Chinese equities fluctuated between gains and losses. Still, some markets advanced: South Korea's benchmark rose 0.8 percent, Taiwan's gained 0.4 percent, and Japan's Nikkei 225 added 1 percent.

Euro Holds Near Multi-Year High

The euro traded steadily around 1.181 dollars, after briefly spiking to 1.19185 dollars — its strongest level since June 2021 — in response to the Fed's statement.

China Resists Following the Fed

The Chinese yuan traded around 7.103 per dollar on Thursday after the People's Bank of China chose to keep borrowing costs on seven-day reverse repos unchanged. The decision signaled a refusal to mirror the Federal Reserve's latest policy shift.

Sterling Retreats

The British pound slipped 0.1 percent to 1.3621 dollars, pulling back from Wednesday's brief rally to 1.3726, the highest level since early July. The Bank of England is set to announce its policy decision later on Thursday, with markets largely expecting the rate to remain at 4 percent.

Fed Cut Odds Rise Sharply

Traders increased their bets on another Federal Reserve rate cut in October. According to CME Group's FedWatch tool, the probability of a quarter-point reduction has risen to 87.7 percent, compared with 74.3 percent just a day earlier.

Canada Moves to Lower Rates

The Bank of Canada reduced its key rate by 25 basis points to 2.5 percent on Wednesday, marking the lowest level in three years and the first cut in six months. Policymakers also signaled readiness to ease further if economic risks intensify in the coming months.

New Zealand Hit by Recession Fears

New Zealand's S&P NZX 50 index fell 0.9 percent after data revealed a sharper-than-expected economic contraction in the second quarter. The New Zealand dollar weakened by 0.7 percent against its US counterpart.

Treasuries Strengthen Again

After a pullback the previous day, the US bond market regained momentum. The yield on ten-year Treasury notes eased to 4.0718 percent compared with 4.076 percent at Wednesday's close.

Short-Term Yields Edge Higher

Two-year Treasury yields, often viewed as a barometer of expectations for Federal Reserve policy, inched up to 3.5385 percent. The modest rise reflects traders' caution about the potential direction of interest rates.

Gold Rebounds from Dip

Gold prices advanced by 0.1 percent to 3662.33 dollars per ounce, recovering slightly after Wednesday's retreat that followed a fresh all-time high.

Oil Prices Retreat

Crude oil slipped lower, with Brent futures down 0.5 percent to 67.62 dollars a barrel.

The material has been provided by InstaForex Company - www.instaforex.com