US Fed Meeting Updates: FOMC Cuts Rates by 25 Basis Points; S&P 500 Hits Record High After Powell's Remarks

Here’s how US markets are reacting after Federal Reserve interest rate cut:

• Dow Jones rose 0.15% to 43,770.54.

• S&P 500 rose 0.9% to an all-time high at 5,979.30.

• Nasdaq rose 1.6% to 21,115.39.

The US 10-year treasury yields has decline to more than 10 basis points to 4.332%.

The FOMC is already beginning to think about slowing the pace of interest rate cuts, Powell said.

Federal reserve chair Jerome Powell said that he would not step down if he would be asked to by the US Present Elect Donald Trump.

The US elections will have no impact in the near term on FOMC decisions, Powell said while answering reporters during a press conference.

The labor market is not a source of significant inflationary pressure, Federal Reserve Chair Powell said during a press conference after the FOMC's interest rate decision on Thursday.

"The labour conditions are less tight than what they were before the Covid-19 pandemic, he said, adding, "The unemployment rate is notably higher than a year ago but remains low."

The committee led by Jerome Powell views the risks to achieving its employment and inflation objectives as "roughly balanced," despite an uncertain economic outlook.

Here’s how US markets are reacting after Federal Reserve interest rate cut:

• Dow Jones little changed at 43,700.37.

• S&P 500 rose 0.6% to 5,965.60.

• Nasdaq rose 1.4% to 21,068.28.

While the inflation has made progress toward the Committee's 2 percent objective but remains somewhat elevated, FOMC said in a statement.

“The labour market conditions have generally eased, and the unemployment rate has moved up but remains low,” FOMC said in a statement.

The US Federal Reserve on Thursday reduced its key interest rate for the second consecutive time by 25 basis points to 4.50-4.75%. A Bloomberg survey of economists had predicted a rate cut of 25 basis points.

In September, the FOMC lowered the rate by 50 basis points to a range of 4.75%-5.00%, marking its first cut in over four years. The central bank had maintained its key interest rate unchanged for eight consecutive meetings until July, when it increased the rate by 25 basis points, reaching a 22-year high.

Read the full story here.

World’s largest cryptocurrency Bitcoin rose 1.7% to $76,498.10 ahead of the FOMC decision on Thursday. Meanwhile, Etherium rallied 7% to $2,871.99.

Here’s how US markets are reacting ahead of Federal Reserve interest rates decision:

• Dow Jones little changed at 43,704.65.

• S&P 500 rose 0.56% to 5,963.90.

• Nasdaq rose 1.3% to 21,044.51.

Federal Reserve Bank of San Francisco President Mary Daly indicated that the US central bank may continue reducing interest rates to prevent further weakness in the labour market.

"So far, I haven’t seen any information that would suggest we wouldn’t continue to reduce the interest rate,” Bloomberg reported last month quoting Daly as saying at WSJ event, adding, "This is a very tight interest rate for an economy already on track for 2% inflation, and I don’t want to see the labour market weaken further."

"We have made significant progress, but inflation continues to exceed the Federal Open Market Committee's (FOMC) 2% target," said Beth Hammack, president of the Cleveland Federal Reserve and an FOMC voter, while speaking at a conference last month.

She noted that the pandemic and its aftermath have underscored how varied changes across different components of inflation can significantly impact overall inflation trends.

The Federal Reserve's indications about possible interest rate reductions have significant implications for Indian markets, particularly for IT companies that heavily rely on the US market for their revenue.

When interest rates rise in the US, it typically leads to reduced consumer expenditure and lower corporate investments, which can negatively impact the growth prospects of Indian IT firms. The IT sector has consistently shown sensitivity to broader US economic trends and monetary policy decisions.

The 10-year Treasury yield decreased by 9 basis points to 4.35%. Meanwhile, the yield on the 2-year Treasury dropped by 7 basis points to 4.21%.

Here’s how US markets are reacting ahead of Federal Reserve interest rates decision:

• Dow Jones little changed at 43,718.61.

• S&P 500 rose 0.7% to 5,969.10.

• Nasdaq rose 1.3% to 21,054.11.

Read the full story here.

Applications for US unemployment benefits rose last week, staying close to the typical levels seen before the pandemic. Continuing claims, which reflect the number of individuals receiving benefits, climbed to 1.89 million in the previous week, marking the highest level since November 2021, according to data released by the Labor Department on Thursday.

Initial claims increased by 3,000 to 221,000 for the week ending Nov. 2, in line with the median Bloomberg estimate.

Read the full story here.

Here’s how US stock markets are reacting ahead of Federal Reserve interest rates decision:

• Dow Jones Industrial Average were little changed at 43,756.02.

• S&P 500 rose 0.6% to 5,966.20.

• Nasdaq advanced 1.3% to 21,043.56.

• US Dollar Index fell 0.8% to $104.31.

US inflation increased more than expected in September, signalling a halt in the recent trend of easing price pressures.

The core consumer price index, which excludes food and energy costs, rose by 0.3% for the second consecutive month, reversing a series of lower readings, according to figures from the Bureau of Labor Statistics released last month. The three-month annualized rate climbed to 3.1%, the highest since May, Bloomberg News reported based on its calculations.

The United States’ inflation-adjusted gross domestic product grew at an annualized rate of 2.8%, following a 3% increase in the previous quarter, according to the government’s initial estimate published last month. The median forecast in a Bloomberg survey of economists had predicted a 2.9% growth rate.

Consumer spending, which is the largest component of economic activity, rose by 3.7%, the highest increase since early 2023. At the same time, a key measure of underlying inflation increased by 2.2%, closely aligning with the Federal Reserve’s target, according to figures from the Bureau of Economic Analysis.

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US labour costs grew at a stronger-than-expected rate in the third quarter, surpassing earlier projections for the year and potentially adding to inflationary pressures.

The unit labour costs—the cost to businesses for each unit of output produced—rose at an annualized rate of 1.9%, following substantial upward revisions to previous quarter figures, According to the data from the Bureau of Labor Statistics released on Thursday.

Here's what the dot plot suggested during September rate cut:

• Median official expected to lower rates by 1 percentage point by year-end.

• This implies two more quarter-point cuts or one larger, half-point cut.

• Nine of 19 officials pencilled in 75 basis points of cuts or less.

• Median rate forecast for 2025 falls to 3.4% from 4.1% in June.

• This implies 4 additional quarter-point moves next year.

Here’s how US markets are reacting ahead of Federal Reserve interest rates decision:

• Dow Jones little changed at 43,743.24.

• S&P 500 rose 0.4% to 5,950.20.

• Nasdaq rose 0.7% to 20,907.76.

Read the full story here.

Here’s how US markets are reacting ahead of Federal Reserve interest rates decision:

• Dow futures are trading little changed.

• S&P 500 futures are trading 0.31% higher.

• Nasdaq futures are up 0.56%.

• Bitcoin rose 1.6% to $74,748.5.

Economists surveyed by Bloomberg expect the Federal Open Market Committee to reduce the federal funds rate target by 25 basis points to between 4.50% and 4.75% at its meeting on Nov. 6-7.

In September, the FOMC lowered the rate by 50 basis points to a range of 4.75%-5.00%, marking its first cut in over four years. The central bank had maintained its key interest rate unchanged for eight consecutive meetings until July, when it increased the rate by 25 basis points, reaching a 22-year high.

The Federal Open Market Committee (FOMC) meeting, which began on Nov. 6, concludes on Nov. 7. US Federal Reserve Chair Jerome Powell is scheduled to hold a press conference around 2:30 pm local time (approximately 12:30 am IST) on Nov. 7.

The press conference will be broadcast live on the US Federal Reserve's official website at https://www.federalreserve.gov/live-broadcast.htm. Additionally, viewers can watch the live stream on the Federal Reserve's social media channels, including their YouTube channel.