Wall Street traded in the green for most of Wednesday's session, on a day when the US Federal Reserve (Fed) announced a new interest rate cut. However, it only took the central bank chairman, Jerome Powell, showing some restraint regarding the possibility of further easing in December to send the indexes into the red, with the Nasdaq being the only one to"escape" losses, while the benchmark S&P 500 remained unchanged.
The S&P 500 closed unchanged at 6,890.71, while the tech-heavy Nasdaq Composite rose 0.55% to a new closing high of 23,958.47. The Dow Jones, however, fell 0.16% to 47,632.00.
After the Fed announced its second 25 basis point cut in benchmark rates this year – already expected by the markets – Powell advised against trying to predict whether another reduction would be likely in December. “In the committee discussions at this meeting, there were strongly divergent views on how to proceed in December. A further rate cut at our December meeting is not a foregone conclusion – far from it,” the central bank leader said at a press conference after the decision was announced.
Ten of the twelve members of the Federal Open Market Committee (FOMC), which brings together the central bank governors with voting rights on monetary policy, voted in favor of a 25 basis point reduction. Governor Stephen Miran disagreed, advocating for a larger reduction, similar to what he had already advocated in September. Along these lines, the governor of the Kansas City Fed, Jeff Schmid, said he preferred not to reduce rates.
Thus, and"given these divergences on both sides, it may be difficult to make a forecast for December," Neil Dutta of Renaissance Macro Research told Bloomberg.
It is this uncertainty that seems to have affected investors' appetite for risk assets, in a session that initially saw the S&P 500 reach new highs.
Now, investors are focused on the earnings reports from three of the"magnificent seven" - Microsoft, Meta and Alphabet - which will be released after the close of trading on Wednesday.
Among market movements, Nvidia gained 2.99% and became the first company to reach a market cap exceeding €5 trillion, driven by recent deals, including with Nokia and Deutsche Telekom. Caterpillar surged more than 11% after reporting results that exceeded analysts' expectations. On the other hand, Kraft Heinz fell more than 4% after the company cut its sales forecasts following a statement by the US CEO that consumer sentiment in the US had reached a historic low.
