Dow Drops Over 100 Points After Fed Rate Decision
- The Federal Reserve cut interest rates by 50 basis points, marking the first rate cut in over four years.
- Despite the rate cut, U.S. stocks closed lower, with the Dow Jones falling approximately 104 points.
- The market sentiment improved, as reflected by the CNN Money Fear and Greed Index moving into the 'Greed' zone.
On Wednesday, the Federal Reserve made a significant decision by cutting interest rates by 50 basis points, bringing the federal funds rate to a range of 4.75% to 5%. This marked the first rate cut in over four years, ending a period of 12 consecutive months where rates remained unchanged. The decision was made during the September Federal Open Market Committee meeting, reflecting a shift in monetary policy aimed at stimulating economic growth. Despite the rate cut, U.S. stocks closed lower, with the Dow Jones dropping approximately 104 points to 41,503.10. The S&P 500 and Nasdaq Composite also experienced declines of 0.29% and 0.31%, respectively. The market sentiment, however, showed signs of improvement, as indicated by the CNN Money Fear and Greed Index, which moved into the 'Greed' zone with a reading of 56.2, up from 55.9. In terms of economic indicators, housing starts in the U.S. rose by 9.6% in August, reaching an annualized rate of 1.356 million units. Additionally, building permits increased by 4.9% to an adjusted annual rate of 1.475 million. These figures suggest a positive trend in the housing market, which could be a factor in the Fed's decision to lower rates. While most sectors on the S&P 500 ended the day negatively, consumer staples, utilities, and information technology stocks faced the largest losses. Conversely, energy and communication services stocks managed to close higher, indicating a mixed market response to the Fed's actions. Investors are now looking forward to upcoming earnings reports from major companies, including Darden Restaurants and FedEx.