The major averages finished mixed on Wednesday as investors assessed the latest policy decision from the Federal Reserve. The Dow gained 36 points, reversing a 200 point loss earlier in the session. The S&P 500 finished just above the flat line, while the Nasdaq Composite declined 0.1%.
The Federal Reserve cut interest rates by 25 basis points to a range of 1.75%-2.00% at the conclusion of the two-day FOMC meeting. The decision was made with a 7-3 majority, with the committee’s statement citing “implications of global developments for the economic outlook as well as muted inflation pressures” for the reduction. In the post-meeting press conference, Chair Jerome Powell noted that that the Fed “took this step to keep the economy strong.” Policymakers also lowered the interest paid on excess reserves to quell the recent volatility in repo markets. Treasuries were mixed, with the yield on the 10-year note down two basis points to 1.79%. On the data front, housing starts jumped 12.3% in August to the highest level since 2007, and rebounding from July’s 1.5% dip.
Six of 11 S&P 500 sectors ended in positive territory. The Energy sector lagged with WTI crude slipping 1.2% to $58.12/barrel after Saudi Arabia stated that its oil production should return to normal by month-end. In earnings, FedEx slid 12.6% after missing analyst estimates on both the top and bottom line and lowering its full-year guidance. General Mills declined 0.9% despite its quarterly profit exceeding consensus estimates. Adobe retreated 1.7% following its disappointing revenue forecast.