Wed Sep 18 02:19:38 UTC 2024: ## Fed Cuts Rates by Half a Percentage Point, Stocks Remain Flat
**New York, NY** – The Federal Reserve on Wednesday made a bold move, slashing interest rates by 50 basis points, marking the first cut in borrowing costs in over four years. The central bank, citing growing confidence in receding inflation, opted for a more substantial reduction than the customary quarter-point adjustment.
The move, however, had a muted effect on major stock indexes, with the S&P 500 closing down 0.29%, the Dow Jones Industrial Average down 0.25%, and the Nasdaq Composite down 0.31%. While stocks initially rose after the announcement, gains were quickly erased as investors seemed to have already priced in the good news after seven consecutive days of gains.
“It’s important to note that stocks are not rocketing ahead (at least not yet) after getting what they wanted,” said Steve Sosnick, chief market strategist at Interactive Brokers. “After seven straight up days, a lot of good news was priced in.”
The dollar strengthened against a basket of currencies, gaining 0.07% after an initial dip following the announcement. Meanwhile, U.S. government debt yields rose, with the benchmark 10-year note yield increasing 6.6 basis points to 3.708%.
While the Fed acknowledged concerns about the labor market, Chair Jerome Powell maintained an optimistic outlook, stating that he sees no sign of a recession. He attributed this to solid growth, lower inflation, and a strong labor market. Powell also hinted that the Fed might have acted sooner to cut rates if they had seen the weak July jobs report earlier.
Markets are now expecting at least a 25 basis point rate cut at the Fed’s next meeting in November, with a substantial likelihood of another 50 basis point reduction.
“There’s a ton of room to go lower here, combined with what I would call wobbly labor data, wobbly not terrifying… They took a big bite to start,” said Tom Herrick, chief market strategist at Cary Street Partners.
The focus now shifts to upcoming policy decisions from other central banks, including the Bank of England and the Bank of Japan, which are both expected to keep interest rates on hold.
First Piper 