Wall Street closed sharply higher on Wednesday in a broad-based rally. Investor mood was upbeat after the Fed announced a quarter-point rate cut, with investors eyeing future easing despite signals of a temporary pause. All three benchmark indexes finished in the green.
How Did the Benchmarks Perform?
The Dow Jones Industrial Average (DJI) rose 1.1%, or 497.46 points, to close at 48,057.75. Twenty-three components of the 30-stock index ended in positive territory, while seven ended in the negative.
The tech-heavy Nasdaq Composite gained 77.67 points, or 0.3%, to close at 23,654.16.
The S&P 500 added 46.17 points, or 0.7%, to close at 6,886.68. Nine of the 11 broad sectors of the benchmark index closed in the green. The Industrials Select Sector SPDR (XLI), the Materials Select Sector SPDR (XLB) and the Consumer Discretionary Select Sector SPDR (XLY) advanced 1.8%, 1.8% and 1.5% respectively, while the Utilities Select Sector SPDR (XLU) receded 0.1%.
The fear gauge CBOE Volatility Index (VIX) decreased 6.9% to 15.77. A total of 16.91 billion shares were traded on Wednesday, lower than the last 20-session average of 17.41 billion. Advancers outnumbered decliners by a 2.86-to-1 ratio on the NYSE and by a 1.93-to-1 ratio on the Nasdaq.
Fed Rate Cut Lifts Wall Street Despite Signals of Pause
Wall Street closed higher in the session after the Federal Reserve delivered an anticipated quarter-percentage-point interest rate cut. The move, widely expected by investors, marked another step in the central bank’s ongoing effort to support economic momentum amid signs of cooling inflation. Markets responded positively as traders interpreted the cut as part of a broader easing cycle, even though policymakers suggested that additional reductions may not come immediately.
In its statement, the Fed emphasized a cautious approach, noting that while inflation has moderated, it remains attentive to economic risks and wants to ensure stability before committing to more aggressive rate reductions. This cautious tone initially tempered some enthusiasm, but overall sentiment remained upbeat as investors viewed the cut as confirmation that monetary policy is shifting gradually toward a more supportive stance. While the Fed expects only one cut in 2026, current investor expectations are for at least one more in the same period.
Major indexes climbed through the session, with gains across technology, financials and consumer-focused stocks. Despite the Fed’s hint at a pause, market participants continued to price in the possibility of further cuts in the coming months, keeping optimism intact and helping Wall Street end the day on a firm note.
Consequently, shares of Caterpillar Inc. CAT and Amazon.com, Inc. AMZN gained 3.5% and 1.7%, respectively. While CAT carries a Zacks Rank #3 (Hold), AMZN has a #2 (Buy). You can see the complete list of today's Zacks #1 Rank (Strong Buy) stocks here.
Treasury Yields Decline Following Fed’s Third Rate Cut in 2025
U.S. Treasury yields fell on Wednesday after the Fed delivered its third straight interest rate reduction in 2025. The 10-year yield declined more than 3 basis points to 4.153%, reflecting stronger investor demand for longer-term government debt. The 30-year yield also edged lower, slipping more than 1 basis point to 4.795%. Short-term rates reacted more sharply, with the 2-year yield dropping more than 7 basis points to 3.542% as traders adjusted expectations for future monetary policy. This also follows the central bank’s statement that it will start buying $40 billion in Treasury bills on Friday.
Economic Data
Per a government report, for the week ended Dec. 5, U.S. commercial crude oil inventories (excluding those in the Strategic Petroleum Reserve) decreased by 1.8 million barrels from the previous week. The increase for the prior week remained unrevised at 0.6 million barrels.
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Amazon.com, Inc. (AMZN): Free Stock Analysis Report Caterpillar Inc. (CAT): Free Stock Analysis ReportThis article originally published on Zacks Investment Research (zacks.com).
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