U.S. stocks ended mixed on Wednesday in a choppy trading session, with the Dow ending higher after the Federal Reserve cut interest rates by a quarter percentage point as expected. However, Federal Reserve Chairman Jerome Powell suggested that the rate cut doesn’t mean the beginning of a long monetary policy easing cycle. The Nasdaq finished lower, while the S&P 500 ended little changed.
How Did The Benchmarks Perform?
The Dow Jones Industrial Average (DJI) rose 0.6% or 260.42 points, to close at 46,018.32 points.
The S&P 500 lost 0.1%, or 6.41 points, to end at 6,600.35 points. Financial and consumer staple stocks were the biggest gainers.
The Financials Select Sector SPDR (XLF) gained 1%. The Consumer Staples Select Sector SPDR (XLP) added 0.6%. The Technology Select Sector SPDR (XLK) fell 0.4%. Seven of the 11 sectors of the benchmark index ended in positive territory.
The tech-heavy Nasdaq shed 0.3%, or 72.63, to finish at 22,261.33.
The fear gauge CBOE Volatility Index (VIX) was down 3.91% to 15.72. Decliners outnumbered advancers on the NYSE by a 1.02-to-1 ratio. On the Nasdaq, a 1.1-to-1 ratio favored declining issues. A total of 18.91 billion shares were traded on Wednesday, higher than the last 20-session average of 16.47 billion.
On the Nasdaq, there were 122 new highs and 45 new lows. On the S&P 500, there were 18 new 52-week highs and five new lows.
Fed Cuts Interest Rate But Investors Still Worried
The Federal Reserve announced a 25-basis point rate cut at the end of its two-day FOMC meeting on Wednesday. The decision was highly anticipated. This brings the central bank’s benchmark policy rate in the range of 4-4.25%.
The Fed last cut interest rates by 25 basis points in December 2024. Yesterday’s announcement was widely expected, and investors were more interested in hearing from the Fed chairman.
Powell cited a weakening labor market at his post-meeting press conference as the reason behind lowering interest rates and signaled two more 25 basis point rate cuts for the rest of the year. However, Powell also said that the rate cut doesn’t mean the beginning of a long monetary policy easing cycle.
He also shared his views on the growing risks of employment compared to inflation and said that the risks arising from inflation must be managed carefully.
Financial stocks gained on Wednesday, lifting the Dow. Shares of American Express Company (AXP) gained 2.7%, while JPMorgan Chase & Co. (JPM) rose 0.8%. American Express has a Zacks Rank #3 (Hold). You can see the complete list of today's Zacks #1 Rank (Strong Buy) stocks here.
However, tech stocks fell on Wednesday. Shares of Broadcom Inc. (AVGO) declined 3.8%, while Oracle Corporation (ORCL) ended 1.7% lower.
The Federal Reserve also gave a hawkish outlook for 2026 rate cuts, as Fed officials are expecting only one rate cut, lower than the market expectations of two or three.
Economic Data
In economic data released on Wednesday, the Commerce Department said that housing starts fell 8.5% in August to a seasonally adjusted annual rate of 1.307 million units.
Single-family housing declined 7% in August to a seasonally adjusted annual rate of 890,000, to hit a two-and-a-half-year low.
Building permits declined 3.7% to a seasonally adjusted annualized rate of 1.312 million in August, the lowest level since May 2020. This was also lower than the analysts’ expectations of 1.37 million.
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JPMorgan Chase & Co. (JPM): Free Stock Analysis Report American Express Company (AXP): Free Stock Analysis Report Oracle Corporation (ORCL): Free Stock Analysis Report Broadcom Inc. (AVGO): Free Stock Analysis ReportThis article originally published on Zacks Investment Research (zacks.com).
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