US stocks closed mixed on Wednesday after the Federal Reserve delivered a long-awaited cut to its benchmark interest rate.
The Dow closed higher by 260 points, or 0.57%. Meanwhile, the broader S&P 500 edged lower by 0.1% and the tech-heavy Nasdaq Composite fell 0.33%.
The stock market had rallied in recent weeks on expectations for a Fed rate cut, but the result wasn’t enough to cause a major move in stocks.
About 460 companies in the S&P 500 rose on Wednesday, but the index was weighed down by losses in big tech companies like Nvidia (NVDA) and Broadcom (AVGO), which sank 2.67% and 3.84%, respectively.
Federal Reserve Chair Jerome Powell said in a press conference that the interest rate cut could be thought of as a “risk-management cut.”
“What’s different now is that you see a very different picture of the risks to the labor market,” Powell said.
“The labor market is getting a little bit weaker, and so they thought it was appropriate to cut rates, but they’re not going to cut rates fast, because they recognize that there is also an inflation problem out there,” David Kelly, chief global strategist at JPMorgan Asset Management, told CNN.
It was reassuring to see only one dissent from the policy decision, as it reaffirmed the image of a balanced and independent Fed, Kelly said.
“The fact that the Federal Reserve is taking its time, it’s being balanced and measured in how it adjusts its rates, I think that that gives confidence to investors all around the world,” he said.
The US dollar index briefly dropped as much as 0.4% after the decision before erasing losses and gaining 0.3% after Powell’s press conference.
Treasury yields initially dipped lower before rising as Powell highlighted inflation risks.