The main US stock indexes edged lower on Wednesday, after reaching a record high earlier in the sessions, in a volatile day of trading that preceded the Federal Reserve’s announcement of an aggressive 50-basis point interest rate cut.
The rate cut brings the target fed funds rate to a new range between 4.75% and 5%, down from a 23-year high of 5.25% to 5.5%. Fed Chair Jerome Powell expressed confidence in the decision, highlighting the central bank’s increased optimism that the period of high inflation has ended.
Although most economists had anticipated a rate cut, the CME Group’s FedWatch Tool indicated that 59% expect a 25-basis-point cut, while 41% anticipate a half-point reduction.
Reacting to the announcement, the S&P 500 index closed 0.29% lower on Wednesday after having hit a 0.44% all-time high earlier in the day. The Nasdaq Composite dipped 0.31% and the Dow Jones Industrial Average fell 103 points to 41,503.10, although it is still near the all-time high it set on Monday.
Treasury yields also experienced volatility, with the 10-year Treasury edged up to 3.71% at the end of Wednesday’s session. The two-year Treasury rose to 3.62%.
In Japan, the Nikkei 225 index jumped 2.3% and stock markets in Australia and Indonesia hit record highs on Thursday.
Meanwhile, gold prices increased by 1.2% to a record high of $2,600.16. The metal was trading at $2,563.27 at 7am UAE time on Thursday.
