Wall Street ends mixed, trade choppy after Fed’s rate cut, outlook

The Nasdaq and the S&P 500 closed lower in choppy trading on Wednesday, after the U.S. Federal Reserve cut interest rates by an expected 25 basis points and Fed Chair Jerome Powell cited the weak job market.

The Dow closed higher after meandering during Powell’s speech.

The central bank indicated it will steadily cut rates for the rest of the year as policymakers signaled concerns about weakness in the labor market. The Fed projected two more quarter-percentage-point cuts this year.

In a press conference, Powell talked about the mounting downside risks of employment compared to inflation, but said inflation risks still must be assessed and managed.

This rate cut was already priced in by investors, according to data compiled by LSEG.

“Powell tempered some of the initial enthusiasm in the markets for a more aggressive path of monetary easing. He noted the softness in the labor market, but reserves a larger cut for more serious conditions that are not present today,” said Michael Rosen, chief investment officer at Angeles Investments.

“The Fed also raised its inflation forecast, highlighting the delicate balance between setting monetary policy to offset a weaker labor market versus bringing inflation lower,” he said.

The Dow Jones Industrial Average rose 260.42 points, or 0.57%, to 46,018.32, the S&P 500 lost 6.41 points, or 0.10%, to 6,600.35 and the Nasdaq Composite lost 72.63 points, or 0.32%, to 22,261.33.

Financial stocks like American Express helped boost the Dow.

The Fed’s decision and outlook will test Wall Street’s recent rally, which has been supported by rate-cut expectations and revived enthusiasm around AI-stock-linked trading.

Powell fielded several questions about the Fed’s independence from the executive branch.

On Tuesday, White House economic adviser Stephen Miran was sworn in as a Fed Governor and an appeals court rejected U.S. President Donald Trump’s attempt to sack Governor Lisa Cook.

Nvidia weighed on the Nasdaq. Shares fell 2.6% after a report said China’s internet regulator had instructed the country’s biggest tech companies to stop buying all of the AI leader’s chips.

Workday jumped 7.2% after a report that activist investor Elliott Management took a more than $2 billion stake in the human resources software provider.

Lyft popped 13.1% on the news that Alphabet’s Waymo would launch autonomous cab rides in Nashville next year in collaboration with the ride-hailing firm. Shares in rival Uber fell 5%.

Declining issues outnumbered advancers by a 1.02-to-1 ratio on the NYSE and by a 1.1-to-1 ratio on the Nasdaq.

The S&P 500 posted 18 new 52-week highs and five new lows while the Nasdaq Composite recorded 122 new highs and 45 new lows.

Volume on U.S. exchanges was 18.91 billion shares, compared with the 16.47 billion average for the full session over the last 20 trading days.