Dow closes lower, giving up gain after Powell signals Fed may not cut again this year
The Dow Jones Industrial Average staged a rapid reversal on Wednesday, touching a record high earlier in the session before rolling over after Federal Reserve Chair Jerome Powell indicated that the central bank might not cut interest rates again in 2025.
The blue-chip index closed down 74.37 points, or 0.2%, to 47,632.00, while the S&P 500 ended a handful of points lower to 6,890.59. The Nasdaq Composite outperformed, rising 0.55% to a fresh record close of 23,958.47, propped up by a rise in Nvidia. The Dow was up as much as 334 points, touching a new all-time high at one point before turning lower.
The Fed lowered its benchmark overnight borrowing rate by a quarter percentage point at the conclusion of its two-day policy meeting Wednesday afternoon, putting it in a range of between 3.75% to 4%. This marks the second time this year that the central bank has slashed rates. Prior to the decision, investors were betting on another quarter-point cut at the Fed’s December meeting.
But Powell knocked down market expectations after saying that there were “strongly differing views about how to proceed in December” during this meeting’s committee discussions. “A further reduction in the policy rate at the December meeting is not a foregone conclusion. Far from it,” he said.
The 10-year Treasury yield jumped back above 4% on Powell’s comments about the December meeting. Stocks that stand to lose from higher rates led the rollover in the market. Consumer stocks like Costco and McDonald’s declined. Visa and Mastercard also fell.
All in all, Powell did indicate that what to do at the December meeting was still in the air, adding that inflation was not too far from the Fed’s target.
Source : Cnbc.com
