U.S. slipped Wednesday afternoon after the Federal Reserve cut interest rates by a quarter percentage point as expected in order to cushion the economy from a global slowdown and escalating trade policy tensions.
The Fed also announced it would end the runoff of its $3.8 trillion asset portfolio two months earlier than previously planned.
The policy statement released after Wednesday’s meeting left open the door for the Fed to cut rates again in the months ahead.
How are the major benchmarks faring?
The Dow Jones Industrial Average DJIA, -0.18% fell by 77 points or 0.3%, to 27,125 and the S&P 500 SPX, -0.17% shed about 8 points, or 0.3% to 3,006. Meanwhile, the Nasdaq Composite COMP, +0.00% lost 12 points, or 8% to 8,265.
On Tuesday, the Dow closed down 23.33 points, or 0.1%, at 27,198.02, while the S&P 500 index fell 7.79 points, or 0.3%, to 3,013.18 and the Nasdaq Composite Index retreated 19.71 points to 8,273.61, a slump of 0.2%.
So far this month, the Dow has climbed 2.3%, the S&P 500 has advanced 2.4%, while the Nasdaq has returned 2.2%.
What’s driving the market?
Iinvestors were widely expecting a 0.25% cut in the federal funds rate and some were disappointed the Fed didn’t lower interest rates by more than a quarter point, or clearly signal that further rate cuts were on the way. Investors will get more clarity regarding the path of future policy during a press conference with Federal Reserve Chairman Jerome Powell, set to begin at 2:30 p.m. Eastern Time.
Apple AAPL, +3.87% shares traded at the highest level in nine months Wednesday after the technology giant shrugged off a slide in iPhone sales and reported better-than-expected second quarter earnings and a robust outlook into the final months of its financial year, though analysts noted a large share buyback program is helping to support its valuation.
But General Electric GE, +1.04% slipped despite beating earnings estimates and raising its full year outlook.
Nearly 60% of S&P 500 companies have reported earnings for the second quarter so far and 76% have posted stronger-than-forecast quarterly profits, according to FactSet.
As Goldman Sachs noted, for the first time since the financial crisis, corporate buybacks are exceeding free cash flow. Total buybacks among all companies this year were up 26% through mid-July.
Read: Here’s how the stock market tends to perform when the Fed cuts rates
As for U.S. economic data, an estimate of private-sector job growth from payroll firm ADP and Moody’s Analytics showed 156,000 new jobs added in July, roughly in line with the 155,000 predicted by economists, according to Econoday.
Overnight U.S. and Chinese delegates, including Trade Secretary Robert Lighthizer and Treasury Secretary Steven Mnuchin, concluded the first round of talks since the G-20 gathering in May without any substantive developments on the tariff front, according to reports.
The White House, however, characterized the talks as “constructive,” and said “the Chinese side confirmed its commitment to increase purchases of United States agricultural exports,” according to a statement, with talks set to continue in Washington in early September.
Read: Trump says he wants more than ‘small’ Fed rate cut
Which stocks are in focus?
Apple Inc. AAPL, +3.87% stock rose 4.5% after the iPhone maker and Dow component late Tuesday reported better-than-expected second-quarter revenue growth. The slowdown in iPhone unit sales in the past couple of years has restrained Apple’s overall growth since its fiscal year ended Sept. 30, 2015, but its large share buyback program has helped to maintain EPS growth and its shares have nearly doubled in the past three years.
Shares of General Electric Co. GE, +1.04% slipped after the industrial conglomerate reported a second-quarter adjusted profit and revenue that topped expectations and raised its full-year outlook. GE said its loss was pegged at 1 penny per share, or 3 cents per share when looking at continuing operations. On an adjusted basis, however, GE earned 17 per share, a figure that compares to last year’s 8 cent profit. Revenues fell 4.3% from last year to $28.8 billion.
Shares of Micro Devices Inc. AMD, -8.81% fell after it projected weaker-than-expected revenue growth for its current quarter late Tuesday.
Shares of Humana Inc. HUM, +5.35% rose after the health-care company reported second-quarter profit and revenue that rose above expectations, and provided an upbeat full-year guidance.
Molson Coors Brewing Co. TAP, -6.61% stock fell 7.5%, after the beer purveyor reported second-quarter revenue and profits that fell below expectations.
Shares of Electronic Arts. Inc. rallied after the videogame maker beat expectations for sales and recognized a $1.7 billion on-paper tax benefit.
Check out: Here’s how the Fed could rattle the market instead of calm it down
How did other markets trade?
Treasury yields came off session lows after the Federal Reserve cut rates for the first time since the financial crisis. The yield on the 10-year U.S. Treasury note TMUBMUSD10Y, -1.82% was around 2.04% after the Fed’s decision.
See: How the Fed could throw a nasty curveball at bond-market bulls with a ‘hawkish cut’
Gold futures finished with a loss on Wednesday, then extended their decline after the U.S. Federal Reserve cut key interest rates by a quarter point, as expected. Gold prices GCZ19, -0.02% had settled down $4, or 0.3%, at $1,437.80 on Comex, ahead of the Fed news.
In commodities markets, the price of crude oil CLU19, +0.43% rose 0.4% to nearly just above $58.26 per barrel on the New York Mercantile Exchange, after U.S. government data showed that domestic crude inventories dropped for a seventh week in a row, the longest stretch of declines in a year and a half.
Read: Oil bulls look to Fed rate cut to overcome demand worries
Also see: History suggests gold vulnerable to ‘sell-the-fact’ reaction if Fed delivers rate cut
The U.S. dollar index DXY, +0.20% was little changed at 98.24, near its highest levels since May.
Check out: Markets are warning that ‘monetary policy will not work,’ says BofA Merrill Lynch
In Asia overnight Monday, China’s CSI 300 index 000300, -0.90% index fell 0.9%, Japan’s Nikkei 225 NIK, -0.86% lost 0.9% and Hong Kong’s Hang Seng HSI, -1.31% fell 1.3%. In Europe, stocks edged 0.1% lower, as measured by the Stoxx Europe 600 index SXXP, +0.17%.
