Despite Fed Rate Cut | New York Stock Exchange Ends Day Down

(New York) The New York Stock Exchange ended down on Wednesday, despite a marked reduction in the rate by the American central bank (Fed), with some investors regretting the measured tone of its president regarding the institution’s upcoming meetings.

The Dow Jones Industrial Average fell 0.25%, the NASDAQ index lost 0.31%, and the broader S&P 500 index fell 0.29%.

The Federal Reserve (Fed) on Wednesday lowered its key interest rate by half a percentage point, which is now in a range of between 4.75% and 5%.

It surprised most economists, who had argued for a quarter-point cut.

Following this communication, the end of the stock market session was, as expected, very volatile, with the indices oscillating between red and green before ending in negative territory.

This sharp cut by the Fed was theoretically likely to satisfy Wall Street, as a lower rate environment benefits stocks.

“But investors are like kids with ice cream: They always want more,” said Steve Sosnick of Interactive Brokers.

But at his press conference, Fed Chairman Jerome Powell “told them not to expect this to become a habit,” the analyst continued.

The central banker adopted a very measured tone, insisting that the institution would “move forward cautiously” and that it would not rule out pausing its monetary easing cycle if conditions justified it.

“It’s all going to depend on how the economy evolves,” Powell said.

Traders recalibrated their expectations on Wednesday and are now only counting on additional cuts of half a point in total at the last two Fed meetings this year, while they were still betting on one point the day before.

The bond market took note and the yield on 2-year US government bonds rose to 3.62% compared to 3.60% the previous day.

Beyond the Fed, “I’m not really surprised by the small wave of selling” on the stock market, explained Steve Sosnick, recalling that the S&P 500 had been on a seven-session winning streak.

The US central bank’s decision triggered a wave of profit taking.

The big names in semiconductors were particularly affected, whether Nvidia (-1.92%), AMD (-1.68%) or Intel (-3.26%).

Conversely, Apple, which has been struggling for a week, has finally rebounded (+1.80%).

Aerospace group Intuitive Machines was launched into orbit (+38.33%) by the announcement of a five-year, $4.8 billion contract with NASA to build infrastructure to enable frequent trips to the Moon.

Earlier this year, the company managed to land its Odysseus module on the moon, the first private probe to land on the Moon.

Thanks to results that exceeded expectations and the confirmation of its forecasts, the food group General Mills gained 0.68%.

Weighed down by a large debt and penalized by eroding sales, the famous Tupperware, whose name has entered common parlance, has filed for bankruptcy. No longer listed since Monday’s close, the stock remained suspended on Wednesday.

US Steel rose 1.52% after the US government’s decision on whether to buy the steelmaker by Japanese rival Nippon Steel was postponed until after the presidential election.

President Joe Biden and the two main candidates in the race, Donald Trump and Kamala Harris, have publicly expressed their hostility to the deal.