Stock market today: Most of Wall Street edges lower after Fed delivers a big cut to rates
The S&P 500 slipped 0.3% to pull 0.9% below its all-time high set in July. The Dow Jones Industrial Average dipped 103 points, or 0.2%, though it remains close to its record set on Monday. The Nasdaq composite lost 0.3%.
The momentous move by the Fed helps financial markets in two big ways. It eases the brakes off the economy, which has been slowing under the weight of higher rates, and it gives a boost to prices for all kinds of investments. Besides stocks, gold and bond prices had already rallied in recent months on expectations that cuts to rates were coming.
Because the move was so well telegraphed, and because markets had already climbed so much in anticipation of it, Wall Street’s reactions were relatively muted despite the Fed’s historic action. It marked the first cut to the federal funds rate in over four years, and it closed the door on a stretch where the Fed kept rates at a two-decade high to slow the economy enough to stifle the worst inflation in generations.
Now that inflation has eased significantly from its peak two summers ago and appears to be heading toward 2%, the Fed says it it can turn more of its attention toward protecting the slowing job market and overall economy.
“The time to support the labor market is when it’s strong and not when you begin to see the layoffs,” Fed Chair
The only question is how much the Fed will ultimately cut rates by to do so, which can prove to be a tricky balance. Lowering rates would help the economy by making it easier for
After that, the median Fed official is projecting another full percentage point of cuts during 2025.
Some critics say the
“When the Fed is behind the curve, it sometimes takes a big move to catch up to where they should have been all along,” said
“We don’t think we’re behind,” Powell said in a press conference following the Fed’s announcement. “We think this is timely. But I think you can take this as a sign of our commitment not to get behind,” pointing to Wednesday’s hefty cut of half a percentage point. Powell called it a “good strong start to this.”
Other critics, meanwhile, say the Fed will need to be careful about cutting rates too much because of the possibility that inflation will remain stubbornly higher than it’s been in recent decades.
Powell repeated several times that the Fed does not feel “a rush to get this done” and will make its decisions on interest rates at each successive meeting, depending on what incoming data say.
“We’ll move as fast or as slow as we think is appropriate in real time,” he said. For now, he said, “the
Like stock prices,
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All told, the S&P 500 slipped 16.32 points to 5,618.26. The Dow dropped 103.08 to 41,503.10, and the Nasdaq composite lost 54.76 to 17,573.30.
In stock markets abroad, indexes fell modestly in
The
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AP Business Writers
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