WALL Street stocks finished modestly lower on Wednesday after the Federal Reserve announced an interest rate cut of half a percentage point, ending days of speculation about the size of the move.
Major US stock indices moved in and out of positive territory after the Fed decision, with the Dow Jones Industrial Average finishing down 0.3 per cent at 41,503.10.
The broad-based S&P 500 also shed 0.3 per cent to 5,618.26, along with the tech-rich Nasdaq Composite Index, which stood at 17,573.30 after the market closed.
The Fed went with the bigger rate cut, surprising some analysts who had tapped the quarter of a percentage point as the more likely decision.
However, some market watchers had said stocks were primed for a pullback no matter the outcome after pushing higher in recent weeks.
“The US economy is in good shape,” said Fed Chair Jerome Powell at a news conference, noting lower inflation and solid growth. “The labour market is in a strong pace. We want to keep it there.”
Powell said the decision to go bigger was based on myriad economic data points that led policy makers to conclude that monetary decisions had been “appropriately restrictive,” but that it was time for policy that is “more neutral.”
Wednesday’s Fed decision will be met “with both elation and criticism,” said Briefing.com. “The larger rate cut should placate participants who think the Fed is behind the curve already in trying to forestall a hard landing.”
“Conversely, it will elicit criticism from participants who think the larger rate cut wasn’t warranted given broader economic trends,” Briefing.com said. “The worry will be that the more aggressive rate cut risks igniting inflation again.” AFP
