Wednesday’s trading saw the S&P 500 ending its seven-day winning streak in a volatile session following the Federal Reserve’s announcement of a significant 50 basis point rate cut, the first cut since March 2020.
By the closing bell at 4:00 p.m. ET (2000 GMT), the S&P 500 fell by 0.3%, the tech-heavy Nasdaq slipped 0.3%, and the Dow Jones Industrial Average dropped by 0.3% or 103 points. Initially, stocks surged in response to the rate cut decision, but later fluctuated wildly before ultimately closing in negative territory.
Federal Reserve implements substantial rate cut
The Federal Reserve made a bold move by cutting interest rates by 50 basis points on Wednesday and indicated the possibility of further rate cuts throughout the year. This action marks the beginning of a rate-cutting cycle aimed at supporting the economy after a prolonged battle against rising inflation.
Prior to the announcement, market expectations were divided between a 25bps or 50bps rate cut. The Fed’s latest guidance suggests the likelihood of two 25bps rate cuts in the remainder of the year, an increase from the previous forecast of just one cut in June.
Described as a “hawkish 50bps” by Capital Economics in a note on Wednesday, the decision to implement a 50bps cut was not unanimous, with the Fed anticipating a total of 50bps in cuts by the end of the year.
Market News: U.S. Steel and Intuitive Machines make significant moves
United States Steel saw its stock price rise following reports from Bloomberg News indicating that Nippon Steel had secured an extension in the review process of its $14.1 billion bid for the American steel company. A final decision is now expected after the November 2024 elections.
Intuitive Machines Inc experienced a substantial 38% jump in its stock price after securing a $5 billion contract from Nasa for lunar communications and navigation services.
Among retail stocks, Victoria’s Secret & Co stood out with a 3% increase after receiving an upgrade from Barclays to equal weight from underweight, citing a more balanced valuation.
(Scott Kanowsky, Ambar Warrick contributed reporting.)