Stock Indices Edge Lower After Fed Delivers Big Rate Cut

U.S. stock indexes have edged lower after the Federal Reserve kicked off its efforts to prevent a recession with a bigger-than-usual cut to interest rates, Stan Choe reported for the Associated Press (AP).

The momentous move by the Fed eases the brakes on the economy, which has been slowing under the weight of higher rates, and it gives a boost to prices for all kinds of investments.

The S&P 500 slipped 0.3%, pulling 0.9% below its all-time high set in July. The Dow Jones Industrial Average dipped 103 points, or 0.2%, though it remains close to its record set on Monday.

The Nasdaq Composite lost 0.3%.

The momentous move by the Fed helps financial markets in two big ways. It eases the brakes on the economy, which has been slowing under the weight of higher rates, and it gives a boost to prices for all kinds of investments.

Besides stocks, gold and bond prices had already rallied in recent months on expectations that rate cuts were coming.

Because the move was so well-telegraphed, and because markets had already climbed so much in anticipation of it, Wall Street’s reactions were relatively muted despite the Fed’s 180-degree turn on rate policy.

It marked the first cut to the federal funds rate in over four years and closed the door on a period where the Fed kept rates at a two-decade high to slow the economy enough to stifle the worst inflation in generations.

Now that inflation has eased significantly from its peak two summers ago and appears to be heading toward 2%, the Fed says it can turn more of its attention toward protecting the slowing job market and overall economy.