The Closing Bell: U.S. Stocks Lower After Fed Cuts Rates .25 Basis Poimts

Ted

FYI: U.S. stocks edged lower after the Federal Reserve said it would cut interest rates for the first time in a decade.

Major stock indexes have rallied this year as investors have cheered the prospect of a rate cut. That came to fruition today, punctuating the rally. The end of the meeting marks a pivotal moment for stocks, bonds and currency markets because of potential clues about what comes next, especially with interest rates already historically low. Some investors are betting on more than one rate cut this year, and the policy statement left open the door for the Fed to cut rates again.

Fed Chairman Jerome Powell could provide inklings about the central bank’s path as he frames the economic outlook.

High expectations ahead of the decision also mean that the Fed’s outlook and wording on further rate cuts could threaten the recent stock rally, analysts said.

Investors sold equities after the policy statement was released. The S&P 500 fell 1.09%. The Nasdaq Composite was lower 1.19%. The Dow Jones Industrial Average lost 334 points, or 1.23%.

The prospect of an interest-rate cut this year also confounded some investors, who point to major U.S. stock indexes near records and strong employment. Many companies that have reported earnings have beat analysts’ expectations, helping propel stocks to fresh highs last week.

Apple stock jumped about 4% after the company reported strong revenue growth on Tuesday. Advanced Micro Devices Inc. fell about 8.6% after it projected weaker-than-expected revenue growth for its current quarter.

Treasury prices rose along with stocks on Wednesday, pushing yields lower, but pared some of their gains after the Fed decision. The yield on the 10-year Treasury note hovered at 2.039% in recent trading, according to Tradeweb, down from 2.063% on Tuesday.

Elsewhere, the Stoxx Europe 600 climbed about 0.2%. European bank stocks rose on Wednesday amid a set of strong earnings reports. Credit Suisse climbed 2.4% and BNP Paribas gained 1.6%. Deutsche Bank’s stock rose 2.1%.

Earlier, Asian stocks fell after tweets from President Trump on Tuesday dampened optimism for a breakthrough in U.S.-China trade talks.

Hong Kong’s Hang Seng was down by 1.3% and the Shanghai Composite Index fell by 0.7%.

Global oil benchmark Brent crude was up 0.5% at $64.95 a barrel, amid continued tensions in the Middle East and expectations of lower interest rates in the U.S.
Regards,
Ted
Bloomberg Evening Briefing:
https://www.bloomberg.com/news/articles/2019-07-31/your-evening-briefing

MarketWatch:
https://www.marketwatch.com/story/us-stocks-set-to-drift-modestly-higher-at-the-open-ahead-of-fed-decision-2019-07-31/print

WSJ:
https://www.wsj.com/articles/global-stocks-slip-ahead-of-fed-decision-11564559429

Bloomberg:
https://www.bloomberg.com/news/articles/2019-07-30/asia-stocks-seen-lower-on-trade-spat-ahead-of-fed-markets-wrap

IBD:
https://www.investors.com/news/economy/fed-rate-cut-disappointing-dow-jones-slips-powell/

CNBC:
https://www.cnbc.com/2019/07/31/stock-market-wall-street-poised-for-first-fed-rate-cut-in-a-decade.html

Reuters:
https://www.reuters.com/article/us-usa-stocks/wall-street-flat-ahead-of-fed-rate-decision-idUSKCN1UQ1GR

U.K:
https://uk.reuters.com/article/uk-britain-stocks/ftse-100-suffers-worst-day-in-two-months-on-poor-earnings-reports-idUKKCN1UQ0T1

Europe:
https://uk.reuters.com/article/uk-europe-stocks/earnings-trade-optimism-help-european-shares-ahead-of-fed-decision-idUKKCN1UQ0SN

Asia:
https://www.cnbc.com/2019/07/31/asia-stocks-us-china-trade-the-fed-currencies-in-focus.html

Bonds:
https://www.cnbc.com/2019/07/31/us-bonds-treasury-yields-tick-lower-ahead-of-fed-rate-decision.html

Currencies:
https://www.cnbc.com/2019/07/31/forex-markets-dollar-the-fed-british-pound-in-focus.html

Oil:
https://www.cnbc.com/2019/07/31/oil-markets-us-inventories-the-fed-in-focus.html

Gold:
https://www.cnbc.com/2019/07/31/gold-markets-us-federal-reserve-in-focus.html

WSJ: Markets At A Glance:
https://markets.wsj.com/us

Major ETFs % Change:
https://www.barchart.com/etfs-funds/etf-monitor

SPDR's Sector Tracker:
http://www.sectorspdr.com/sectorspdr/tools/sector-tracker

SPDR's Bloomberg Sector Performance Pie Chart:
https://www.bloomberg.com/markets/sectors

Current Futures:
https://finviz.com/futures.ashx

Charles

Be careful what you wish for, I guess is the take-away.