US stocks experienced a robust rally on Wednesday following the Federal Reserve’s decision to cut interest rates by 25 basis points, marking their final policy move of the year. The Dow Jones Industrial Average surged by 1.1%, which translates to an increase of over 500 points. The S&P 500 climbed 0.7%, inching closer to what could be a record high, while the tech-centric Nasdaq Composite rose by 0.4%.
This latest reduction in interest rates represents the third cut this year, with the Fed indicating a more cautious approach moving forward, projecting only one additional cut for 2026. As a result of the decision, the benchmark interest rate now sits in the range of 3.5% to 3.75%.
The decision to cut rates was not unanimous; there were differing opinions among the Fed’s leadership. Kansas City Fed President Jeff Schmid and Chicago Fed President Austan Goolsbee expressed their dissent, advocating for the rates to remain unchanged, while Fed Governor Stephen Miran sought a more aggressive cut of half a percentage point.
Recent discussions among Federal Open Market Committee (FOMC) members have revealed a divide, with some officials advocating for easier monetary policy to bolster a softening labor market, while others caution that additional rate cuts could reignite inflation concerns. Market participants are keenly awaiting remarks from Fed Chair Jerome Powell during his press conference at 2:30 p.m. ET for insights on the committee’s future strategy.
In corporate news, GameStop saw its stock price decline after reporting quarterly revenue figures that fell short of expectations. In contrast, shares of the US manufacturer GE Vernova soared by 15% following a significant dividend increase.
Looking ahead, the technology sector is set for a critical test as Oracle prepares to release its earnings report. Wall Street is particularly optimistic, viewing Oracle as a key player in the ongoing AI landscape. Additionally, major companies such as Broadcom, Costco, and Lululemon are scheduled to report their earnings on Thursday, further shaping investor sentiment in the tech space. The current developments in the stock market reflect a cautiously optimistic outlook among investors, as they closely monitor both corporate earnings and Federal Reserve signals for future economic direction.