Wall Street’s new era is off to rocky start as Fed sows doubts

Jerome Powell's significant interest-rate cut initially boosted stocks and bonds, but gains faded as economic realities set in. Despite the aggressive move, market clarity remains elusive with stock prices near record highs and a slowing economy. The Fed's future rate cuts are uncertain, causing concern among traders.

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Jerome Powell delivered exactly what traders up and down Wall Street had long hoped for: A big interest-rate cut that would justify this year’s steep rally in stocks and bonds as the era of tight monetary policy finally began to reverse. Equities, especially those of economically sensitive companies, briefly surged Wednesday, driving the S&P 500 up as much as 1%. Ditto bonds, while the prospect of easy money ahead initially pushed up speculative assets like crypto.

Yet by the time the trading day ended, the gains fizzled as a more sobering economic and market reality sunk in. Even with the half-point rate cut — the kind of aggressive move usually reserved for a recession or crisis — and more on the way, the investment backdrop was no more clear cut than it was before. Stock prices are already near record highs.



The economy is losing a little steam. And it’s no sure thing that the rock-bottom rates swept away by post-pandemic inflation will come back anytime soon. From stocks to Treasuries, corporate bonds to commodities, every major asset was down Wednesday.

While the scale of the declines were minor, a concerted pullback like that hadn’t followed a Fed policy decision since June 2021. Stock Trading Market 101: An Insight into Trendlines and Momentum By - Rohit Srivastava, Founder View Program Stock Trading Markets 102: Mastering Sentiment Indicators for Swing and Positional Trading By - Rohit Srivastava, Founder View Program Stock Trading Market 103: Mastering Trends with RMI and Techno-Funda Insights By - Rohit Srivastava, Founder View Program Stock Trading Market 104: Options Trading: Kickstart Your F&O Adventure By - Saketh R, Founder- QuickAlpha, Full Time Options Trader View Program Stock Trading ROC Made Easy: Master Course for ROC Stock Indicator By - Souradeep Dey, Equity and Commodity Trader, Trainer View Program Stock Trading RSI Made Easy: RSI Trading Course By - Souradeep Dey, Equity and Commodity Trader, Trainer View Program Stock Trading Technical Analysis for Everyone - Technical Analysis Course By - Abhijit Paul, Technical Research Head, Fund Manager- ICICI Securities View Program Stock Trading Introduction to Technical Analysis & Candlestick Theory By - Dinesh Nagpal, Full Time Trader, Ichimoku & Trading Psychology Expert View Program Stock Trading Options Trading Course For Beginners By - Chetan Panchamia, Options Trader View Program Stock Trading Options Scalping Made Easy By - Sivakumar Jayachandran, Ace Scalper View Program Stock Trading Futures Trading Made Easy: Future & Options Trading Course By - Anirudh Saraf, Founder- Saraf A & Associates, Chartered Accountant View Program Stock Trading Stock Markets Made Easy By - elearnmarkets, Financial Education by StockEdge View Program Stock Trading Renko Chart Patterns Made Easy By - Kaushik Akiwatkar, Derivative Trader and Investor View Program Stock Trading Options Trading Made Easy: Options Trading Course By - Anirudh Saraf, Founder- Saraf A & Associates, Chartered Accountant View Program Stock Trading Stock Investing Made Easy: Beginner's Stock Market Investment Course By - elearnmarkets, Financial Education by StockEdge View Program Stock Trading Macroeconomics Made Easy: Online Certification Course By - Anirudh Saraf, Founder- Saraf A & Associates, Chartered Accountant View Program Stock Trading Stock Valuation Made Easy By - Rounak Gouti, Investment commentary writer View Program Stock Trading Candlesticks Made Easy: Candlestick Pattern Course By - elearnmarkets, Financial Education by StockEdge View Program Stock Trading Technical Analysis Made Easy: Online Certification Course By - Souradeep Dey, Equity and Commodity Trader, Trainer View Program Stock Trading Technical Trading Made Easy: Online Certification Course By - Souradeep Dey, Equity and Commodity Trader, Trainer View Program Stock Trading Commodity Markets Made Easy: Commodity Trading Course By - elearnmarkets, Financial Education by StockEdge View Program Stock Trading Derivative Analytics Made Easy By - Vivek Bajaj, Co Founder- Stockedge and Elearnmarkets View Program Stock Trading A2Z of Stock Market for Beginners: Stock Market Course For Beginners By - elearnmarkets, Financial Education by StockEdge View Program Stock Trading Dow Theory Made Easy By - Vishal Mehta, Independent Systematic Trader View Program Stock Trading Cryptocurrency Made Easy: Cryptocurrency Course By - elearnmarkets, Financial Education by StockEdge View Program Stock Trading A2Z of Stock Trading - Online Stock Trading Course By - elearnmarkets, Financial Education by StockEdge View Program Stock Trading Algo Trading Made Easy By - Vivek Gadodia, Partner at Dravyaniti Consulting and RBT Algo Systems View Program ETMarkets.com Of particular concern to traders were comments from Powell that coincided with the reversal in the stock and bond markets: that nobody should expect the Fed to make a habit of half-point reductions in the future, and that the neutral level of interest rates is likely higher than it was before the pandemic.

“The important point here is that there’s the action, in the 50 basis points, and the expectation in what was priced in,” said Jeffrey Rosenberg, a portfolio manager at BlackRock Inc., on Bloomberg Television. “This is a little bit disappointing relative to what’s been built up in bond expectations.

” That was clear in the immediate reaction to the Fed’s announcement. The S&P 500 briefly touched an intraday record before retreating. Two-year Treasury yields , among the most sensitive to policy changes, fell to a session low of 3.

54%, only to end the day higher. Ditto the 10-year Treasury rate. (You can now subscribe to our ETMarkets WhatsApp channel ).