Following the Federal Reserve's larger-than-usual interest rate cut to launch its efforts to avert a recession, U.S. stock indexes slightly declined on Wednesday.
The S&P 500 fell 0.3 per cent, bringing it down 0.9 per cent from its peak, which was reached in July. The index touched a day-high of 5,689.75 points in the last trading session after opening at the 5,641.68 level on the much anticipated day for the Wall Street.
In the last trading day, the S&P 500 shuttered at 5,616 points, losing 16.32 points from the weak opening of 5,641.68 points on US bourses.
The Dow Jones Industrial Average
The Dow Jones Industrial Average fell by 103 points, amounting to 0.2 per cent, but it is still quite near the high it reached on Monday. The marquee index touched a day high level of 41,981.97 after the index rang the opening bell at 41,628.91 points.
The Dow Jones Industrial Average concluded the previous trading session at 41,503.10 points. after shedding 103.08 points from the opening of 41,628.91 points on Wall Street.
Nasdaq composite
The tech heavy index Nasdaq composite containing all the heavy-weight tech giants, including the magnificent seven. The Nasdaq Composite saw an opening at 17,663.38 points before it touched the day-high level of 17,832.70 points.
The index containing the tech giants settled at 17,573.30 points at the end of the trading session after trading in declining territory for the entire trading day, which had taken off 0.13 per cent from the Nasdaq composite.
Benefits for the financial markets
The Fed's historic decision benefits the financial markets in two significant ways. It boosts prices for a variety of investments and releases some of the brakes on the economy, which has been flagging due to higher interest rates. In addition to stocks, the price of gold and bonds had already increased recently due to the anticipation of rate cuts.
Anticipated rate cut
Wall Street's reactions were largely subdued despite the Fed's U-turn-on rate policy because the move was so well-telegraphed and because markets had already risen so much in anticipation of it.
This was the first federal funds rate reduction in more than four years, and it ended a period of time during which the Fed maintained rates at a two-decade high in an attempt to slow the economy and contain the worst inflation in living memory.
Fed Chair Jerome Powell stated in his address, 'The time to support the labour market is when it’s strong and not when you begin to see the layoffs.'
