WASHINGTON (dpa-AFX) - After showing a lack of direction for much of the session, stocks moved mostly higher in the latter part of the trading day on Wednesday following the Federal Reserve's interest rate decision.
The major averages all moved to the upside on the day after ending Tuesday's choppy trading session narrowly mixed.
The Dow jumped 497.46 points or 1.1 percent to 48,057.75, the S&P 500 climbed 46.17 points or 0.7 percent to 6,886.68 and the Nasdaq rose 77.67 points or 0.3 percent to 23,654.16.
The late-day strength on Wall Street came after the Fed announced its widely expected decision to cut interest rates by another quarter point, matching the rate cuts seen in September and October.
The Fed said it decided to lower the target range for the federal funds rate by 25 basis points to 3.50 to 3.75 percent.
While a majority of Fed officials voted to cut rates by another quarter point, three cast dissenting votes for the first time since September 2019.
Fed Governor Stephen Miran preferred lowering rates by 50 basis points, while Chicago Fed President Austan Goolsbee and Kansas City Fed President Jeffrey Schmid preferred to leave rates unchanged.
The central bank's latest summary of economic projections also showed significant divisions about the outlook for rates.
The forecast for rates at the end of 2026 was unchanged from September at a range of 3.25 to 3.50 percent, suggesting just one more quarter point rate cut next year.
However, the closely watched 'dot plot' of individual officials' expectations showed widely divergent views, with one official forecasting rates at a range of just 2.0 to 2.25 percent by the end of 2026 and some predicting higher rates.
The divided views among Fed officials come as the central bank seeks to balance its dual goals of achieving maximum employment and inflation at the rate of 2 percent over the longer run.
Despite the mixed views, traders seem optimistic about the outlook for rates, potentially reflecting hopes for a move dovish regime under President Donald Trump's new Fed Chair choice.
'We're not surprised to see near term optimism in the markets given that the Fed continues to cut rates even though the economy is growing,' said Chris Zaccarelli, Chief Investment Officer for Northlight Asset Management.
He added, 'However, we think the rose colored glasses may come off once investors realize that the path to lower interest rates may take longer - or may not materialize at all - to the extent that they believe it will.'
Sector News
Housing stocks showed a substantial move to the upside following the Fed announcement, driving the Philadelphia Housing Sector Index up by 3.1 percent.
Significant strength also emerged among transportation stocks, as reflected by the 2.7 percent surge by the Dow Jones Transportation Average.
Banking, computer hardware and pharmaceutical stocks also saw considerable strength, while software stocks showed a notable move to the downside.
Other Markets
In overseas trading, stock markets across the Asia-Pacific region moved mostly lower during trading on Wednesday. Japan's Nikkei 225 Index slipped by 0.1 percent, while China's Shanghai Composite Index dipped by 0.2 percent.
Meanwhile, the major European markets are turning in a mixed performance on the day. While the U.K.'s FTSE 100 Index is up by 0.3 percent, the German DAX Index is down by 0.4 percent and the French CAC 40 Index is down by 0.5 percent.
In the bond market, treasuries are regaining ground after trending lower over the past several sessions. Subsequently, the yield on the benchmark ten-year note, which moves opposite of its price, is down by 2.0 basis points at 4.166 percent.
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