US stocks end mixed after Fed cuts rates, Powell raises doubts for further December cut
ISTANBUL
The New York Stock Exchange ended the midweek on a mixed note after the Federal Reserve cut the policy rate by 25 basis points, while Chair Jerome Powell made it clear that another rate cut at the December meeting is “far from a foregone conclusion.”
The Dow Jones was down 0.16%, or 74.37 points, to close at 47,632.
On the other hand, the Nasdaq rose 0.55%, or 130.98 points, to close at 23,958.47, while the S&P 500 was mostly flat at 6,890.59 points.
The mixed course followed the Fed’s decision to cut the federal funds rate by 25 basis points to 3.75%-4%, as well as Powell’s reservations about a further rate cut this year.
The central bank said in the monetary policy statement that the downside risks to employment have risen in recent months and that inflation has moved up since earlier in the year and remains “somewhat” elevated.
In addition, the central bank stated that it has decided to end the balance sheet reduction process as of December 1.
At the post-meeting press conference, Powell expressed doubts on Wednesday about a further policy rate cut at the central bank’s December meeting, contrary to market expectations, saying it “is not a foregone conclusion, far from it.”
“In the committee’s discussions at this meeting, there were strongly differing views about how to proceed in December. A further reduction in the policy rate at the December meeting is not a foregone conclusion. Far from it,” Powell said.
While there is still a blackout for government data releases due to the ongoing federal government shutdown, Powell said the central bank will continue to obtain some economic information from sources other than government data. However, Powell added that high uncertainty could influence the outcome of the December meeting.
He added that there is “a growing chorus” among the 19 Fed officials to “at least wait a cycle” before cutting again.
On the corporate side, the chip giant Nvidia’s shares climbed 3%, and the firm became the first in history to reach a $5 trillion market value.
The most recent rise in the firm’s shares came soon after Nvidia CEO Jensen Huang said the company expects to receive $500 billion in orders for AI chips and revealed plans to build seven new supercomputers for the US government. In another announcement on Tuesday, Nvidia said it was acquiring a $1 billion stake in Nokia in order to establish a strategic alliance with the networking firm to develop 6G cellular technology.
Boeing shares fell more than 4% after reporting a nearly $5 billion charge related to delays in the 777X jet program in its financial statements released on Wednesday.
Telecommunications company Verizon, which reported a better-than-expected profit, also gained more than 2%.
Meanwhile, four weeks after the US federal government shut down due to Congress’s failure to approve a temporary budget proposal, Republicans and Democrats have still failed to reach a budget agreement.
On the trade front, the outcome of US President Donald Trump’s meeting with Chinese President Xi Jinping on Thursday in South Korea is awaited.
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