US Stocks End Mixed After Fed Rate Cut 09/18 16:21
Major U.S. stock indexes closed mostly higher Wednesday after the Federal
Reserve cut its benchmark interest rate for a second time this year, citing
slowing global economic growth and uncertainty over U.S. trade conflicts.
(AP) -- Major U.S. stock indexes closed mostly higher Wednesday after the
Federal Reserve cut its benchmark interest rate for a second time this year,
citing slowing global economic growth and uncertainty over U.S. trade conflicts.
Gains in banks, utilities and technology companies outweighed losses
elsewhere in the market, which had been broadly lower until the last hour of
trading. Bond yields moved lower.
Stocks initially declined after the central bank announced the widely
expected rate cut. Its policy statement failed to indicate whether more rate
cuts were likely this year, though the central bank left the door open for
additional rate cuts if the economy weakens.
"We're not on a preset course," Fed Chairman Jerome Powell said in an
afternoon press conference.
Even so, diverging opinions within the members of the Fed's policymaking
committee left some investors feeling uneasy about what the Fed may do next.
"The (Fed) cut rates, as expected, but the quantity and necessity of future
rate cuts were called into question," Sam Stovall, chief investment strategist
at CFRA, wrote in a research note.
The S&P 500 index inched 1.03 points higher, or less than 0.1%, to 3,006.73.
The benchmark index is now within 0.7% of its all-time high set in July.
The Dow Jones Industrial Average rebounded after being down most of the day,
adding 36.28 points, or 0.1%, to 27,147.08. The Nasdaq slid 8.62 points, or
0.1%, to 8,177.39.
The Russell 2000 index of smaller company stocks bore the brunt of the
selling, dropping 9.95 points, or 0.6%, to 1,568.34.
The Fed is trying to combat threats to the U.S. economy, including
uncertainties caused by President Donald Trump's trade war with China, slower
global growth and a slump in American manufacturing.
Investors largely expected the Fed to cut short-term interest rates by
another quarter of a percentage point, following a similar cut in late July.
The rate, which is now at a range of 1.75% to 2%, influences many consumer and
A look at how each of the central bank's policymakers voted offered few
clues as to the likelihood of further rate cuts.
Fed officials approved the rate cut 7-3, with two officials preferring to
keep rates unchanged and one arguing for a bigger half-point cut. It was the
most Fed dissents in three years. The policy committee also remains split on
whether rates should be a quarter-point lower, higher or the same as they are
now by the end of this year.
The divisions among Fed officials underscore the challenges confronting
Powell in guiding the Fed at time of high uncertainty in the U.S. economy. They
also fuel doubts among investors looking for certainty on interest rate policy.
"The Fed didn't say a lot that was new, but there are some people who were
just holding on and hoping against hope that there would be some kind of dovish
surprise, and there wasn't," said Sameer Samana, senior global market
strategist at Wells Fargo Investment Institute.
The broader market has been wobbling this week and is so far on track for a
slight weekly loss after three consecutive weeks of gains. Those gains came as
both sides in the U.S.-China trade war took steps to ease tensions ahead of
planned negotiations in October.
But, the volatility has been taking its toll. The S&P 500 is eking modest
gains of 2.2% for the quarter with just a few weeks left. That marks a pullback
from gains of 3.8% in the second quarter and a notable deceleration from the
13.1% rise during the first quarter.
Bond prices rose and the yield on the 10-year Treasury fell to 1.80% from
1.81% late Tuesday. Investors typically shift money into bonds when they grow
more concerned about the economy's health.
Financial stocks recovered from an early slide. JPMorgan gained 1% and
Citigroup rose 0.9%.
A disappointing drop in quarterly profit weighed on FedEx shares, which
tumbled 12.9%, making it the biggest decliner in the S&P 500. The package
delivery giant also cut its full-year forecast.
Adobe fell 1.8% after giving investors a weak profit forecast.
Chewy slid 6.1% to $28.39 after the online pet store's fiscal second quarter
loss was far wider than Wall Street had expected. The company debuted on the
New York Stock Exchange in June at $22 per share and closed at $34.99 on its
Major stock indexes in Europe closed mostly higher. Asian stocks ended
Oil prices continued pulling back from a 14% spike on Monday as Saudi Arabia
brings back production at an oil facility attacked over the weekend. Benchmark
U.S. crude fell $1.23 to settle at $58.11 per barrel. Brent crude, the
international standard, dropped 95 cents to close at $63.60.
Wholesale gasoline fell 2 cents to $1.66 per gallon. Heating oil declined 2
cents to $1.97 per gallon. Natural gas fell 3 cents to $2.64 per 1,000 cubic
Gold rose $2.40 to $1,507.50 per ounce, silver fell 22 cents to $17.80 per
ounce and copper fell 1 cent to $2.60 per pound.
The dollar rose to 108.35 Japanese yen from 108.20 yen on Tuesday. The euro
weakened to $1.1032 from $1.1066.