US close: Markets turn red as Fed confirms 25 basis point rate cut
Wall Street stocks had slipped into the red by the close on Wednesday, as the Federal Reserve cut its target interest rates for the first time in more than a decade.
Dow Jones I.A.
38,765.49
04:30 15/10/20
Nasdaq 100
18,040.32
10:25 06/05/24
The Dow Jones Industrial Average ended the session down 1.23% at 26,864.27, the S&P 500 was off 1.09% at 2,980.38, and the Nasdaq 100 slid 1.3% to 7,848.78.
Before the closing bell, the Fed voted to reduce its benchmark interest rate by 25 basis points to a target range of between 2% and 2.25%, which was the first time it had been cut since December 2008.
Investors, who had largely been expecting such a move, appeared more interested in the comments from chairman Jerome Powell, who said the cut was part of its ongoing work to keep in line with economic conditions, and was no guarantee of future cuts.
“We’re thinking of it essentially as a mid cycle adjustment to policy,” Powell said, warning markets not to consider the move as the start of rate-cutting cycles as in the past.
“That refers back to other times when the FOMC has cut rates in the middle of a cycle and I’m contrasting it there with the beginning of a lengthy cutting cycle.
“That is not what we’re seeing now, that’s not our perspective now.”
Oanda's Craig Erlam said earlier in the day that the stock market seemed to hinge on the Fed to cut interest rates to a “satisfactory degree”, while signalling more to come in the near future.
Erlam noted that while a rate cut was "almost guaranteed", he feared that markets would be disappointed by "the lack of a clear laid out path for more cuts in the coming months".
At the open, the Dow was 54.48 points higher after closing softer on Tuesday as a fresh round of trade talks between Chinese and US officials kicked off in Shanghai.
While both sides were already looking to downplay expectations of a quick end to the trade war, Donald Trump further dampened any hopes that it would be possible after taking aim at China in a series of tweets.
On Tuesday morning, Trump said China was not keeping its promise of buying more US agricultural products and said the world's second-largest economy was "doing very badly".
However, China insisted it has, in fact, purchased US agricultural products.
Elsewhere on the data front, private-sector payrolls in the States increased at a slightly quicker than expected pace in July, the results of a closely-followed survey revealed.
According to consultancy ADP, payrolls grew by 156,000 in July (consensus: 150,000) following an upwardly revised increase of 112,000 for June.
Elsewhere, one of the more closely-followed gauges of US manufacturing sector activity unexpectedly weakened again last month, amid indications of muted demand and with employment at its weakest since October 2009.
Market News International's Chicago Purchasing Managers' Index fell from a reading of 49.7 in June to 44.4 for July, missing economists' forecasts for an improvement to 51.8.
In corporate news, General Electric's second-quarter earnings came in ahead of expectations on the Street, while Spotify posted a bigger-than-expected loss as paid subscriber numbers disappointed.
Shares in GE still finished down 0.67%, while Spotify Technology was 0.17% weaker in New York.
Dow Jones - Risers
Apple Inc. (AAPL) $213.04 2.04%
JP Morgan Chase & Co. (JPM) $116.00 0.35%
Pfizer Inc. (PFE) $38.84 0.13%
Dowdupont Inc. (DWDP) $30.52 0.00%
Merck & Co. Inc. (MRK) $82.99 -0.34%
Goldman Sachs Group Inc. (GS) $220.12 -0.57%
Travelers Company Inc. (TRV) $146.62 -0.68%
McDonald's Corp. (MCD) $210.72 -0.76%
Caterpillar Inc. (CAT) $131.66 -0.96%
Chevron Corp. (CVX) $123.11 -0.99%
Dow Jones - Fallers
Microsoft Corp. (MSFT) $136.27 -2.91%
Verizon Communications Inc. (VZ) $55.27 -2.40%
Unitedhealth Group Inc. (UNH) $248.93 -2.32%
Intel Corp. (INTC) $50.55 -2.22%
Coca-Cola Co. (KO) $52.63 -2.03%
Procter & Gamble Co. (PG) $118.04 -1.97%
Visa Inc. (V) $178.00 -1.94%
Cisco Systems Inc. (CSCO) $55.40 -1.89%
Boeing Co. (BA) $341.18 -1.81%
Home Depot Inc. (HD) $213.69 -1.69%
Nasdaq 100 - Risers
Amgen Inc. (AMGN) $186.58 5.74%
Electronic Arts Inc. (EA) $92.50 4.44%
Align Technology Inc. (ALGN) $209.08 2.87%
Apple Inc. (AAPL) $213.04 2.04%
Fiserv Inc. (FISV) $105.43 1.46%
Sirius XM Holdings Inc (SIRI) $6.26 1.29%
Activision Blizzard Inc. (ATVI) $48.74 0.93%
Automatic Data Processing Inc. (ADP) $166.52 0.92%
Kraft Heinz Co. (KHC) $32.01 0.53%
Check Point Software Technologies Ltd. (CHKP) $111.95 0.47%
Nasdaq 100 - Fallers
Maxim Integrated Products Inc. (MXIM) $59.19 -7.70%
Micron Technology Inc. (MU) $44.89 -5.42%
Western Digital Corp. (WDC) $53.89 -4.77%
Xilinx Inc. (XLNX) $114.21 -4.43%
Wynn Resorts Ltd. (WYNN) $130.07 -4.09%
DENTSPLY Sirona Inc. (XRAY) $54.45 -3.92%
Nvidia Corp. (NVDA) $168.72 -3.84%
Paychex Inc. (PAYX) $83.05 -3.59%
Henry Schein Inc. (HSIC) $66.54 -3.40%
Broadcom Inc. (AVGO) $289.99 -3.19%