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on wednesday, eastern time, the federal reserve cut interest rates by 50 basis points, but fed chairman powell claimed that he was not in a hurry to relax policy. u.s. stocks experienced a thrilling roller coaster ride, with the three major indexes rising and falling, and ultimately all closing slightly lower. among them, the dow jones industrial average and the s&p 500 both hit new highs during the session.

powell said the fed is not in a hurry to cut interest rates, and warned against viewing large-scale interest rate cuts as a regular rhythm in the future. the hawkish tendency in his speech caused the three major u.s. stock indexes to turn from rising to falling.

in addition, gold fell after hitting a new high; u.s. oil closed lower, and the market is assessing the possible impact of the federal reserve's 50 basis point rate cut on oil prices.

the federal reserve cuts interest rates by 50 basis points

at 2 a.m. beijing time on september 19, the u.s. federal reserve announced that it would lower the target range of the federal funds rate to 4.75% to 5%, a 50 basis point cut, which was the first rate cut by the fed since 2020. from march 2022 to july last year, the fed raised interest rates 11 times in more than a year, with a cumulative increase of 525 basis points. since july last year, it has remained unchanged for eight consecutive meetings, keeping the policy interest rate at its highest level since 2001.

the rate cut decision was not supported by all fomc voting members. the statement showed that one person voted against the 50 basis point rate cut, while the dissenting fed governor bowman supported the 25 basis point rate cut. bowman thus became the first fed governor to vote against the decision of the majority of fomc members at the fomc interest rate meeting since 2005.

federal reserve chairman jerome powell said at a subsequent press conference: although there was one dissenting vote on the fed's 50 basis point rate cut, the fed was largely unanimous on the decision.

"there was a lot of discussion back and forth, and the decision the committee voted to make was broadly supported," powell said. he also said that the federal reserve cut interest rates by 50 basis points, but investors should not assume that interest rates will continue to be cut by this amount in the future.

"today the federal reserve reduced the pace of policy tightening," powell said. "our decision today reflects growing confidence that the strength in the labor market can continue; the labor market has cooled from earlier overheating. consumer spending has remained resilient. housing sector investment retreated in the second quarter. our forecasts show that gdp growth is expected to remain solid."

he said: "the fed can maintain a strong labor market through policy adjustments. inflation has eased significantly, but remains above our target; longer-term inflation expectations appear to remain stable."

powell said: "upside risks to inflation have diminished, while downside risks to the labor market have increased. considering the balance of risks, we lowered interest rates by 50 basis points today. the federal reserve is not in any default mode."

in addition, the "dot plot" released by the federal reserve shows that the median expectation of policymakers is to cut interest rates by one percentage point by the end of the year, which means there will be two more 25 basis point cuts or larger cuts; 9 of the 19 officials expect the rate cut to be no more than 75 basis points. the median forecast for interest rates in 2025 fell from 4.1% in june to 3.4%, which means there will be four more 25 basis point cuts next year.

"recent economic data suggest that the u.s. economy remains relatively strong compared to other periods of economic easing, with unemployment at 4.2%, up from a year ago but at full employment, and gdp growth at an annual rate of 3.0% through the second quarter of 2024," said philip strahl, chief investment officer for morningstar wealth americas.

he believes that a 50 basis point rate cut is "rare in recent decades" and that this aggressive rate cut shows that the fed "feels comfortable that the downward trend in inflation is sustainable" and is now turning its focus to achieving a soft landing for the economy.

us stocks fell after rising

after the federal reserve announced a 50 basis point interest rate cut, the three major u.s. stock indexes quickly expanded their gains, with the s&p 500 index rising to a high of 5,689.75 points and the dow jones industrial average rising to a high of 41,981.97 points, both setting record highs during the trading session. however, the three major indexes quickly gave up some of their gains and turned to decline across the board.

as of the close, the dow jones industrial average fell 0.25% to 41,503.10 points; the nasdaq fell 0.31% to 17,573.30 points; and the s&p 500 fell 0.29% to 5,618.26 points.

source: wind

most large technology stocks fell, with intel down more than 3%, netflix down more than 2%, microsoft and nvidia down more than 1%, and tesla and amazon down slightly; apple rose more than 1%, and google's parent company alphabet and meta up slightly.

most bank stocks fell, with jpmorgan chase down 0.78%, goldman sachs down 0.11%, citigroup up 1.01%, morgan stanley down 0.55%, bank of america up 0.21%, and wells fargo down 0.46%.

chip stocks generally fell, with intel down 3.26%, asml down 2.22%, nvidia down 1.92%, amd down 1.68%, micron technology down 1.56%, broadcom down 0.49% and qualcomm down 0.24%.

most of the popular chinese stocks fell, with nio falling more than 7%, zeekr falling more than 6%, dada group, xpeng motors, and dingdong maicai falling more than 4%, gds and ehang intelligent technology falling more than 3%, li auto, boss direct, and legend biotech falling more than 2%; in terms of gains, zhichong technology rose more than 65%, and canadian solar rose more than 4%.

gold prices fall from highs

on september 18, eastern time, the price of gold fell after hitting a new high of over $2,600 per ounce.

as the rate cut cycle begins, "interest rates are falling and the strength of the dollar will begin to weaken. this is good for gold." will rhind, founder of investment firm graniteshares advisors, said, "if it feels like we are heading for a recession, fear factors emerge, and people need to buy gold for hedging, there will be a wave of increases in gold prices."

gold prices have risen more than 24% this year, hitting new highs. in early 2024, the rally was supported by demand from emerging markets, especially from central banks and asian investors. gold, an interest-free asset, typically benefits from a low interest rate environment, while concerns about a recession often prompt investors to buy gold for safety.

international oil prices fell across the board, with the november contract of u.s. crude oil falling 1.16% to $69.15 per barrel, and the november contract of brent crude oil falling 1.1% to $72.21 per barrel. the market is assessing the possible impact of the fed's 50 basis point rate cut on oil prices.