Stocks edge lower, US yields fall after Fed delivers rate cut

NEW YORK: World stocks edged lower in choppy trading while US Treasury yields fell across the board on Wednesday (Sep 17) after the Federal Reserve delivered a much-expected interest rate cut and signalled the start of a monetary policy easing cycle.

The Fed cut rates by a quarter of a percentage point and indicated it will steadily lower borrowing costs for the rest of this year. Only new Governor Stephen Miran, who joined the Fed on Tuesday and is on leave as head of the White House’s Council of Economic Advisers, dissented in favour of a half-percentage-point cut.

MARKET REACTION

Benchmark S&P 500 and the Nasdaq traded slightly lower while the Dow rose after the Fed’s announcement.

The Dow Jones Industrial Average gained 0.56 per cent to 46,014.88. The S&P 500 fell 0.31 per cent to 6,585.98 and the Nasdaq Composite dropped 0.75 per cent to 22,162.03.

MSCI’s gauge of stocks across the globe slid 0.14 per cent to 975.41, retreating from record highs.

TREASURY YIELDS FALL

The benchmark US 10-year note yield fell 1.5 basis points to 4.009 per cent.

The two-year note yield, which typically moves in step with interest rate expectations for the Fed, fell 1.5 basis points to 3.495 per cent.