U.S. stocks close lower after Fed rate cut

NEW YORK, Sept. 18 (Xinhua) — U.S. stocks ended lower on Wednesday, after the Federal Reserve announced a 0.5-percentage-point interest rate cut.
The Dow Jones Industrial Average fell 103.08 points, or 0.25 percent, to 41,503.1. The S&P 500 sank 16.32 points, or 0.29 percent, to 5,618.26. The Nasdaq Composite Index shed 54.76 points, or 0.31 percent, to 17,573.3.
Nine of the 11 primary S&P 500 sectors ended in red, with utilities and technology leading the laggards by losing 0.77 percent and 0.51 percent, respectively. Meanwhile, energy and communication services led the gainers by rising 0.25 percent and 0.02 percent, respectively.
The U.S. Fed cut interest rates by 50 basis points on Wednesday, bringing the benchmark interest rate to a range of 4.75 percent to 5 percent, the first rate cut in four years.
In its policy statement, the Fed said the decision reflected “greater confidence that inflation is moving sustainably toward 2 percent” and that the central bank “judges that the risks to achieving its employment and inflation goals are roughly in balance.”
“We are committed to maintaining our economy’s strength,” Fed Chair Jerome Powell said at a news conference. “This decision reflects our growing confidence that, with an appropriate recalibration of our policy stance, strength in the labor market can be maintained in a context of moderate growth and inflation moving sustainably down to 2 percent.”
“I don’t see anything in the economy right now that suggests that the likelihood of a recession, sorry, of a downturn, is elevated,” he said. “The U.S. economy is basically fine.”
However, the 2-year U.S. Treasury yield, which is closely tied to the Fed policy, edged higher on Wednesday even after Fed officials reduced their median interest rate projections through 2026.
Following the cut on Wednesday, U.S. stocks experienced volatile trading, swinging between gains and losses throughout the session. The key question for markets remains whether the economy is entering a recession, as this will have the most significant influence on future stock performance.
“The decision to cut by the more aggressive 0.50% increment suggests the Fed has gotten comfortable that the downward trends in inflation are sustainable and may now be shifting their focus to avoid causing economic stress by keeping rates too high for too long,” said Morningstar Wealth Chief Investment Officer Philip Straehl. ■