the federal reserve cut interest rates by 50 basis points!
2024-09-19
한어Русский языкEnglishFrançaisIndonesianSanskrit日本語DeutschPortuguêsΕλληνικάespañolItalianoSuomalainenLatina
yangzi evening news reported on september 19 (reporter fan xiaolin) at eastern time on the 18th (early morning of the 19th beijing time), the federal reserve announced its first major interest rate cut since 2020, by 50 basis points, lowering the target range of the federal funds rate to 4.75%~5% to prevent a slowdown in the labor market.
the fed's dot plot shows that the median forecast for the federal funds rate at the end of 2024 is 4.4%, compared with 5.1% previously. among the 19 officials, two believe that after this meeting, interest rates should not be cut further in 2024; seven believe that interest rates should be cut by another 25 basis points, nine believe that interest rates should be cut by another 50 basis points, and one believes that interest rates should be cut by another 75 basis points.
as the market had not reached a consensus on the extent of the rate cut, the market reacted strongly after the announcement, and the us treasury yields also fluctuated significantly.
aside from the emergency rate cut in 2020, the last time the federal open market committee cut rates by 50 basis points was during the 2008 global financial crisis.
u.s. stocks closed lower on wednesday as a sharp rate cut was initially welcomed by traders, although it did raise concerns that the federal reserve was trying to get ahead of potential economic weakness. however, fed chairman powell saw no signs in the u.s. economy right now that the chances of a recession were increasing.
the dow jones industrial average fell 103.08 points, or 0.25%, to 41,503.10. it had risen as much as 375.79 points after the fed's decision. the s&p 500 fell 0.29% to 5,618.26. the nasdaq composite fell 0.31% to 17,573.30.
bank stocks hit session highs after the federal reserve cut interest rates by half a percentage point. the spdr s&p bank etf rose 2.4%, with servisfirst bancshares and glacier bancorp both rising more than 4%. the spdr s&p regional bank etf rose 3.3%, on track for its biggest one-day gain since aug. 23.
according to data from 10jq, the three major u.s. stock indexes rose and fell on wednesday, eastern time. as of the close, the dow jones industrial average fell 0.25%, the s&p 500 fell 0.29%, and the nasdaq fell 0.31%.
among them, the dow jones and s&p 500 both hit intraday highs. most large technology stocks fell, with intel falling more than 3%, netflix falling more than 2%, nvidia falling more than 1%, tesla and amazon falling slightly; apple rose more than 1%, and google and meta rose slightly.
as for other individual stocks, space concept stock intuitive machines rose nearly 40%. the company won a $4.82 billion "near space network" contract from nasa, covering interstellar data transmission relay and navigation services between the earth and the moon.
most of the popular chinese concept stocks fell, with the nasdaq china golden dragon index falling 0.86%. nio fell more than 7%, xpeng motors fell more than 4%, li auto fell nearly 3%, bilibili fell more than 2%, futu holdings and manbang fell more than 1%, baidu, vipshop, netease, tencent music, alibaba, and pinduoduo fell slightly. weibo rose more than 1%, and iqiyi rose slightly.
some analysts said the more aggressive decision to cut interest rates by 50 basis points showed that the fed has become convinced that the downward trend in inflation is sustainable and may now be shifting its focus to avoid keeping interest rates too high for too long, putting pressure on the economy.
analysts believe that part of the reason for wednesday's decline in u.s. stocks may be due to the sharp rise before wednesday's rate cut. the s&p 500 has risen nearly 18% this year and more than 1% in the past month.
the fed’s rate cut marks the sixth time in the past three decades that the central bank has shifted from raising to lowering rates. typically, when the fed begins cutting rates, it doesn’t know whether it will take a few small steps, as it did in 1995 and 1998 when the economy avoided recessions, or begin a longer series of cuts, as it did in 2001 and 2007. while the rate determines short-term borrowing costs for banks, it spills over to a variety of consumer products, including mortgages, auto loans and credit cards.
proofread by li haihui
