Stocks take a brutal slide after the Fed signals fewer rate cuts ahead

American stocks fell to one of its worst days in the year after the federal reserve hinted on Wednesday that it might provide less than the adrenaline bullets to the American economy in 2025 formerly.

The S&P 500 decreased by 2.9 %, just shy of its largest loss for this year, to withdraw more than its high group ever two weeks ago. Dow Jones Industrial MEVERGAL 1123 points, or 2.6 %, lost, and Nasdaq 3.6 % decreased.

The Federal Reserve said on Wednesday that it reduces the main interest rate for the third time this year, as it continued the sharp transformation that started in September when it started to reduce rates higher than two decades to support the labor market. Wall Street loves easier interest rates, but this reduction was already expected.

The biggest questions focus on how much the Federal Reserve Bank will reduce next year. There is a lot riding on it, especially after the expectations of a series of discounts in 2025 that has ever helped the US stock market 57 times so far in 2024.

Federal Reserve officials issued expectations on Wednesday showing that the average expectations between them are other discounts of the federal funds rate in 2025, or half the percentage of the percentage. This decreased from the four expected discounts just three months ago.

“We are in a new stage of the operation,” said Federal Reserve Chairman Jerome Powell. The central bank has already reduced the main interest rate quickly to a full percentage to a range ranging from 4.25 % to 4.50 % since September.

When Powell was asked why federal reserve officials are looking to slow their discounts, Powell pointed out how the labor market seems to be well in general and how she chose modern inflation readings. He also pointed to the uncertainty that require policy makers to interact with the upcoming and specific changes in the economy.

While lower rates can be the economy of the economy by making it cheaper in borrowing and enhancing prices for investments, it can also provide more fuel for inflation.

Powell said that some federal reserve officials, but not all of them, are already trying to integrate the inherent uncertainty in a new administration that comes to the White House. Fears in Wall Street are that president -elect Donald Trump’s preference for definitions and other policies can increase juice enlargement, along with economic growth.

“When the path is not certain, you go a little slower,” said Powell. “It is not different from driving on a foggy night or walking in a dark room full of furniture. You just slow down.”

One of the officials, head of the Cleveland team, Beth Hamak, believes that the central bank should not reduce prices this time. It was the only vote against Wednesday’s price reduction.

Low expectations to reduce the rates of 2025 treasury revenue send a rise in the bond market, with pressure on the stock market.

The return on the cabinet increased for 10 years to 4.51 % from 4.40 % late on Tuesday, a noticeable step for the bond market. The return increased for two years, which tracks the expectations closely for the FBI movement, to 4.35 % from 4.25 %.

In Wall Street, the shares of companies that could feel the greatest pressure from high interest rates have decreased to some of the worst losses.

Small companies’ shares were particularly bad, for example. Many need borrowing to feed their growth, which means that they can feel more pain when needed to pay higher interest rates for loans. The Russian 2000 index of small CAP stocks decreased by 4.4 %.

Elsewhere in the Wall Street, General Mills decreased by 3.1 % despite reporting a stronger profit for the last quarter of the expected. Soups and Cheerios for the PROGRESSO industry said it will increase its brand investments to help them grow, which prompted it to reduce its expectations for profit in this fiscal year.

NVIDIA, the stellar stocks responsible for a large part of the Wall Street gathering to records in recent years, have decreased by 1.1 % to extend the fang for a period of weeks. More than 13 % of its record has decreased last month and fell in nine of the past ten days, with its great momentum slowed.

At the end of the Wall Street victory, Gabel jumped by 7.3 % to help lead the market after reporting stronger profits and revenues for the last quarter of what analysts expected. The electronics company also raised its expectations to obtain revenues for its full financial year.

Finally, the S&P 500 178.45 points decreased to 5,872.16. Dow Jones 1,123.03 decreased to 42,326.87, and SKEDDDDDDDDDDDDDDDAD 716.37 to 19,392.69.

In stock markets abroad, FTSE 100 in London increased by less than 0.1 % after data showed that inflation accelerated to 2.6 % in November, its highest level in eight months. The Bank of England also meets interest rates this week and will announce its decision on Thursday.

In Japan, where the Bank of Japan will conclude its policy meeting on Friday, Nikkei 225 fell 0.7 %. This was despite the 23.7 % jump of Nissan Motor Corp, which she said had been holding talks on close cooperation with Honda Motor, although no decision was made about a possible integration. Honda Motor’s share lost 3 %.

Mitsubishi Motors Corp, Nissan, Honda and Nissan Alliance, in August, agreed to share electric car components such as batteries and to joinly search for independent driving for better adaptation with dramatic changes in the automotive industry.

This story was originally shown on Fortune.com

2024-12-18 22:27:00