Wall Street Sees Muted Response To Fed Decision: Markets Wrap

A widely anticipated Federal Reserve rate cut elicited a muted reaction across Wall Street, with stocks and bonds fluctuating after policymakers largely validated expectations for gradual easing.

The policy pivot took place as officials try to backstop labor-market weakness, marking a shift after worries about inflation kept them on hold for months. The S&P 500 swung between gains and losses. The yield on 2-year Treasuries was little changed. The dollar remained at lowest since 2022.

US policymakers slashed rates by 25 basis points Wednesday while penciling in two more reductions for this year. Officials said the unemployment rate had “edged up but remains low,” adding that “downside risks to employment have risen.”

Traders are now shifting their attention to Fed Chair Jerome Powell’s press conference.

• Art Hogan at B. Riley Wealth: As this is very much within consensus and had been well anticipate since the weak July jobs report, we may see some short term “buy the rumor/sell the news” reaction in markets.

• Bret Kenwell at eToro: In-line, in-line, in-line. The Fed delivered exactly what the market was expecting today, which was the first of three interest rate cuts for 2025. Will we see a classic “sell the news” reaction to the Fed announcement, particularly in the seasonally weak month of September? While markets could use a breather, bulls will likely line up to buy the dip provided that the economy avoids a recession and earnings expectations continue higher.

• Jeff Roach at LPL Financial: Investors are taking this decision in stride. As the risks to labor markets rise, we should expect further cuts in October and December. We now await the press conference.

• Krishna Guha at Evercore: We view this as bullish-dovish, even though it stems from concerns on the labor side.

• Chris Low at FHN Financial: While this sounds like a balanced assessment, the statement goes on to say, “downside risks to employment have risen.” Participants appear just a little more comfortable with easing, both a little sooner and little further than they were in June.

• Simon Dangoor at Goldman Sachs Asset Management: The skew of the dot plot indicates that the Fed is likely to deliver 25bp cuts in October and December on top of today’s reduction. It would take a significant upside surprise in inflation or labor market rebound to take the Fed off its current easing trajectory.

• Richard Flynn at Charles Schwab UK: Investors will now turn their attention to whether the Fed plans additional rate cuts this year, particularly as recession fears continue to grow.

• China’s internet watchdog has instructed companies including Alibaba Group Holding Ltd. and ByteDance Ltd. to terminate orders for  Nvidia Corp.’s RTX Pro 6000D, the Financial Times reported, citing people with knowledge of the matter.

• This is a “counterproductive development,” US House Speaker Mike Johnson told CNBC.

• Apple Inc.’s smartphone sales in China in the weeks leading up to the iPhone 17 launch fell 6% from the year-earlier period, a deeper slump than is typical ahead of a new flagship product release.

• Reddit Inc. is in early talks to strike its next content-sharing agreement with Alphabet Inc.’s Google, aiming to extract more value from future deals now that its data plays a prominent role in search results and generative AI training.

• United Airlines Holdings Inc. Chief Executive Officer Scott Kirby says a lack of new aircraft is impeding his plans to modernize the fleet and cash in on booming premium travel.

• General Mills Inc. posted a solid quarter, but kept its outlook in place as the maker of Cheerios cereal called out consumers being cautious from economic uncertainty.

• Patients on Eli Lilly & Co.’s experimental diabetes pill lost more weight and had better blood sugar control than those on an older, approved rival from Novo Nordisk A/S in the first head-to-head trial of the two medicines.

• Lyft Inc. is partnering with Waymo for the first time to offer robotaxi service in Nashville starting next year, a deal that helps it better compete with rival Uber Technologies Inc.

• General Motors Co. is in preliminary talks to renew its longtime joint venture with China’s SAIC Motor Corp., signaling the US automaker’s budding optimism about its business in the world’s largest auto market after years of decline.

• StubHub Holdings Inc. priced its initial public offering at the midpoint of a marketed range to raise $800 million, capping co-founder Eric Baker’s years-long pursuit of a listing for the ticket-selling platform.

• Artificial intelligence chip startup Groq Inc. raised $750 million at a post-funding valuation of $6.9 billion, highlighting investor interest in companies seeking to alleviate a shortage of chips and computing power for AI workloads.

• Rithm Capital Corp. agreed to buy Paramount Group Inc., an office landlord in New York and San Francisco, for about $1.6 billion.

• Manchester United, the Premier League’s fallen giant, is struggling to keep tabs with its larger rivals after revenues flat-lined and losses continued to mount.

• British drugmaker GSK Plc pledged to invest $30 billion in the US over the next five years, making the announcement as President Donald Trump arrived in the UK for a highly anticipated state visit.

• AstraZeneca Plc’s Fasenra failed to meet its goal in a late-stage trial of patients with chronic obstructive pulmonary disease for a second time, a blow to the drugmaker’s efforts to expand the market for the asthma treatment.

• Abu Dhabi National Oil Co. walked away from a proposed $19 billion offer for Australian natural gas producer Santos Ltd., saying a “combination of factors” discouraged it from making a final bid.

Some of the main moves in markets:

• The S&P 500 fell 0.5% as of 2:43 p.m. New York time

• The Nasdaq 100 fell 0.9%

• The Dow Jones Industrial Average rose 0.2%

• The MSCI World Index fell 0.4%

• Bloomberg Magnificent 7 Total Return Index fell 1.3%

• The Russell 2000 Index rose 0.6%

• The Bloomberg Dollar Spot Index was little changed

• The euro fell 0.2% to $1.1848

• The British pound was little changed at $1.3652

• The Japanese yen was little changed at 146.50 per dollar

• Bitcoin fell 1.5% to $115,106.17

• Ether fell 1.1% to $4,451.35

• The yield on 10-year Treasuries advanced four basis points to 4.06%

• Germany’s 10-year yield declined two basis points to 2.68%

• Britain’s 10-year yield declined one basis point to 4.63%

• The yield on 2-year Treasuries advanced two basis points to 3.52%

• The yield on 30-year Treasuries advanced two basis points to 4.67%

• West Texas Intermediate crude fell 0.9% to $63.93 a barrel

• Spot gold fell 0.7% to $3,663.61 an ounce