US: Dow ends down, S&P 500 flat as Powell says December rate cut far from assured
[NEW YORK] The Dow ended lower and the S&P 500 finished flat on Wednesday after the Federal Reserve cut interest rates but Fed Chair Jerome Powell said another rate cut in December is far from assured.
The Nasdaq registered another record closing high, boosted by Nvidia after the AI chipmaker made history as the first company to reach US$5 trillion in market value.
In earlier trading, stocks rose and then added to gains after the Fed cut interest rates by a quarter of a percentage point, as expected, and said it will restart limited purchases of Treasury securities.
Fed policymakers also noted the limits in their decision-making process due to the US federal government shutdown. The Fed lowered the overnight benchmark rate to a target range of 3.75 per cent to 4.00 per cent, the second time the US central bank eased this year.
After Powell spoke, traders pared bets on a December rate cut, giving it a 71 per cent chance, down from 90 per cent.
“Chairman Powell indicated that another rate cut is not a foregone conclusion,” said Oliver Pursche, senior vice-president and advisor for Wealthspire Advisors in Westport, Connecticut.
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“But no rate cut is ever a foregone conclusion. So, to me, that is not an inappropriate comment. The (Fed) is data dependent.”
Nvidia’s stock ended the session up 3 per cent at US$207.04, giving it a stock market value of US$5.03 trillion. It has risen more than 50 per cent this year, leading the artificial intelligence rally on Wall Street.
The Dow Jones Industrial Average fell 74.37 points, or 0.16 per cent, to 47,632.00, the S&P 500 lost 0.30 points to 6,890.59 and the Nasdaq Composite gained 130.98 points, or 0.55 per cent, to 23,958.47.
“The rate cut was expected. Powell’s remarks took some shine off the market,” said Michael Rosen, chief investment officer at Angeles Investments in Santa Monica, California. “But this is a temporary reaction. It is earnings that ultimately drive equities, and those earnings have been strong.”
The majority of US earnings results so far this reporting period have beaten analysts’ expectations. Of the 222 companies in the S&P 500 that have reported so far, some 84.2 per cent have posted earnings above Wall Street estimates, according to data compiled by LSEG as of Wednesday. That is above the 77 per cent average from the past four quarters.
Among Wednesday’s key results, Caterpillar reported a third-quarter profit that beat expectations, and its shares jumped 11.6 per cent.
After the closing bell, shares of Meta Platforms, Microsoft and Alphabet were mixed following quarterly reports by the three megacaps.
Shares of Meta Platforms were down more than 8 per cent in extended trading, while Microsoft was down 1 per cent and Alphabet was up about 5 per cent.
Meta recorded a nearly US$16 billion one-time charge that hurt third-quarter profits and said its capital expenditure next year would be “notably larger” than in 2025.
Strong AI demand helped Alphabet’s financial results, while Microsoft’s AI infrastructure spending soared to a record in the September quarter and deepened investor cost concerns.
Declining issues outnumbered advancers by a 2.16-to-1 ratio on the NYSE. There were 476 new highs and 170 new lows on the NYSE.
On the Nasdaq, 1,453 stocks rose and 3,306 fell as declining issues outnumbered advancers by a 2.28-to-1 ratio.
Volume on US exchanges was 20.71 billion shares, compared with the 21 billion average for the full session over the last 20 trading days. REUTERS
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