U.S. Stocks Tumble as Fed Signals Slower Rate Cuts Ahead

U.S. Stocks Tumble as Fed Signals Slower Rate Cuts Ahead

Key Points:

Major U.S. indexes fell sharply; Nasdaq led losses, dropping 3.6%.

All S&P sectors declined, with Consumer Discretionary being the weakest.

The U.S. dollar gained over 1%, crude oil remained flat, gold dropped more than 2%, and Bitcoin slid around 5%.

The 10-year Treasury yield climbed to approximately 4.50%.

Report Summary:

U.S. stocks sank on Wednesday as the Federal Reserve cut interest rates by 25 basis points but signaled a slower pace for additional rate cuts in the coming year. The Dow Jones and S&P 500 recorded their steepest daily declines since early August, while the Nasdaq posted its worst drop since late July.

The Dow extended its losing streak to 10 sessions, the longest since 1974. The Federal Reserve’s latest projections indicated two potential quarter-point rate cuts in 2024, aligning with a cautious “wait-and-see” approach amid rising inflation.

Hardest-hit areas included regional banks, semiconductor stocks, and small caps, with the Philadelphia Semiconductor Index (SOX) falling 3.9% and the Russell 2000 (RUT) down 4.4%.

All major S&P 500 sectors closed lower, led by Consumer Discretionary, which fell 4.7%, and Real Estate, which declined 4%.