US STOCKS CLOSE LOWER AFTER FED RATE CUT

NEW YORK, Sept 19 (Bernama-Xinhua) -- US stocks ended lower on Wednesday, after the Federal Reserve announced a 0.5-percentage-point interest rate cut, reported Xinhua.

The Dow Jones Industrial Average fell 103.08 points, or 0.25 per cent, to 41,503.1. The S&P 500 sank 16.32 points, or 0.29 per cent, to 5,618.26. The Nasdaq Composite Index shed 54.76 points, or 0.31 per cent, to 17,573.3.

Nine of the 11 primary S&P 500 sectors ended in red, with utilities and technology leading the laggards by losing 0.77 per cent and 0.51 per cent, respectively. Meanwhile, energy and communication services led the gainers by rising 0.25 per cent and 0.02 per cent, respectively.

The US Fed cut interest rates by 50 basis points on Wednesday, bringing the benchmark interest rate to a range of 4.75 per cent to 5 per cent, the first rate cut in four years.

In its policy statement, the Fed said the decision reflected "greater confidence that inflation is moving sustainably toward 2 per cent" and that the central bank "judges that the risks to achieving its employment and inflation goals are roughly in balance."

"We are committed to maintaining our economy's strength," Fed Chair Jerome Powell said at a news conference.

"This decision reflects our growing confidence that, with an appropriate recalibration of our policy stance, strength in the labour market can be maintained in a context of moderate growth and inflation moving sustainably down to 2 per cent."

"I don't see anything in the economy right now that suggests the likelihood of a recession, the US economy is basically fine," he said.

However, the two-year US Treasury yield, which is closely tied to the Fed policy, edged higher on Wednesday even after Fed officials reduced their median interest rate projections through 2026.

Following the cut on Wednesday, US stocks experienced volatile trading, swinging between gains and losses throughout the session. The key question for markets remains whether the economy is entering a recession, as this will have the most significant influence on future stock performance.

"The decision to cut by a more aggressive 0.50 per cent suggests that the Fed has gotten comfortable that the downward trends in inflation are sustainable and may now be shifting their focus to avoid causing economic stress by keeping rates too high for too long," said Morningstar Wealth Chief Investment Officer Philip Straehl.  

-- BERNAMA-XINHUA