Fed Delivers First Rate Cut of Year, Signals More Ahead as Stocks and Bonds React Cautiously – US Market Wrap

Wall Street received a boost after the Federal Reserve cut interest rates for the first time this year and signalled further easing by the end of 2025, resulting in gains in stocks and bonds.
A record-breaking stock rally stalled, while bond yields rose, as the Federal Reserve’s decision to cut rates and signal two more reductions this year was already priced in.

The announcement was followed by Powell’s remarks, which highlighted the tension between the Fed’s two mandates, implying “there’s no risk-free path” ahead. After briefly rising, the S&P 500 fell by only 0.1%. Treasuries fell slightly, while the dollar rose.

The reaction reflected a temperate stance by the central bank, which acknowledged a cooling in the labour market while signalling that it will remain data-dependent in the face of price risks.

US policymakers cut interest rates by 25 basis points on Wednesday, with two more reductions planned for this year. Officials stated that the unemployment rate “edged up but remains low,” and that “downside risks to employment have risen.”