Wall Street ends mixed, trade choppy after Fed's rate cut, outlook
NEW YORK: The Nasdaq and the S&P 500 closed lower in choppy trading on Wednesday (Sep 17), after the US Federal Reserve cut interest rates by an expected 25 basis points and Fed Chair Jerome Powell cited the weak job market.
The Dow closed higher after meandering during Powell's speech.
The central bank indicated it will steadily cut rates for the rest of the year as policymakers signalled concerns about weakness in the labour market. The Fed projected two more quarter-percentage-point cuts this year.
In a press conference, Powell talked about the mounting downside risks of employment compared to inflation, but said inflation risks still must be assessed and managed.
This rate cut was already priced in by investors, according to data compiled by LSEG.
“Powell tempered some of the initial enthusiasm in the markets for a more aggressive path of monetary easing. He noted the softness in the labour market, but reserves a larger cut for more serious conditions that are not present today," said Michael Rosen, chief investment officer at Angeles Investments.
"The Fed also raised its inflation forecast, highlighting the delicate balance between setting monetary policy to offset a weaker labour market versus bringing inflation lower," he said.
The Dow Jones Industrial Average rose 260.42 points, or 0.57 per cent, to 46,018.32, the S&P 500 lost 6.41 points, or 0.1 per cent, to 6,600.35 and the Nasdaq Composite lost 72.63 points, or 0.32 per cent, to 22,261.33.
Financial stocks like American Express AXP.N helped boost the Dow.
The Fed's decision and outlook will test Wall Street's recent rally, which has been supported by rate-cut expectations and revived enthusiasm around AI-stock-linked trading.
Powell fielded several questions about the Fed's independence from the executive branch.
On Tuesday, White House economic adviser Stephen Miran was sworn in as a Fed Governor and an appeals court rejected US President Donald Trump's attempt to sack Governor Lisa Cook.
Nvidia weighed on the Nasdaq. Shares fell 2.6 per cent after a report said China's internet regulator had instructed the country's biggest tech companies to stop buying all of the AI leader's chips.
Workday jumped 7.2 per cent after a report that activist investor Elliott Management took a more than US$2 billion stake in the human resources software provider.
Lyft popped 13.1 per cent on the news that Alphabet's Waymo would launch autonomous cab rides in Nashville next year in collaboration with the ride-hailing firm. Shares in rival Uber fell 5 per cent.
Declining issues outnumbered advancers by a 1.02-to-1 ratio on the NYSE and by a 1.1-to-1 ratio on the Nasdaq.
The S&P 500 posted 18 new 52-week highs and five new lows while the Nasdaq Composite recorded 122 new highs and 45 new lows.
Volume on US exchanges was 18.91 billion shares, compared with the 16.47 billion average for the full session over the last 20 trading days.
