US Indices: Powell Dampens Easing Expectations After Fed Cuts Rates Today

Fed Cuts by 25bps as Powell Warns Against Easing Expectations

The Dow Jones closed higher Wednesday while the S&P 500 ended nearly flat following the Federal Reserve’s decision to cut rates by 25 basis points. The central bank’s move was widely expected, but Fed Chair Jerome Powell offered a cautious message that undercut hopes for a sustained easing cycle. Stocks most sensitive to interest rates rallied, while tech lagged on profit-taking.

The Dow rose 260 points, or 0.6%, to close at 46,018.32 after touching a record high. The S&P 500 slipped 0.1% to 6,600.35, while the Nasdaq Composite dropped 0.3% to 22,261.33. Traders rotated into financials and small caps as Powell signaled support for the economy without overcommitting to future cuts.

What Did Powell Signal on Future Cuts?

• Called the move a “risk management cut”, not the start of a full easing cycle
• Emphasized the labor market is softening, but doesn’t need to weaken further
• Noted goods inflation is rising and may build through year-end and into 2026
• Downplayed the need for a 50bps cut, saying it lacked broad support
• Stated there’s “no risk-free path” for policy from here
• Said tariff effects on inflation are still developing, but likely to intensify
• Stressed the Fed is watching employment and inflation risks equally

Which Sectors Gained Most on the Rate Cut?

Financials rose 0.96% as lower rates benefit banks with strong consumer exposure. Consumer staples gained 0.9%, with traders rotating into defensive names. Utilities, also rate-sensitive, advanced 0.29%.

Technology was the session’s worst performer, down 0.7%. Traders took profits in Nvidia, Oracle, Palantir, and Broadcom—all of which had led this year’s AI rally. Industrials fell 0.45%, while consumer discretionary slid 0.31%.

Which Stocks Led and Lagged?

Top gainers included Hologic (+7.7%), Workday (+7.2%), Fox Corp A (+3.0%), and American Express (+2.7%). Adobe, PayPal, and First Solar also gained over 2.6%.

Major decliners were Builders FirstSource (-5.6%), Uber (-5.0%), Mohawk Industries (-4.0%), and Broadcom (-3.8%). Profit-taking hit several big-cap names after recent gains.

In after-hours trading, Cracker Barrel fell 10% following mixed earnings and lowered guidance. The company pulled back from a controversial rebrand and forecast full-year revenue below Wall Street expectations, with same-store traffic seen declining up to 7%.

Market Forecast: What Should Traders Expect Next?

Traders should expect policy uncertainty through year-end. While the Fed penciled in two more cuts for this year, only one cut is forecast for 2026, versus market pricing of two to three. The next catalysts will be inflation data and job reports. With Powell highlighting risks on both sides, traders should watch for sticky inflation and any signs of labor softening as cues for the Fed’s next move.

Rate-sensitive plays may continue to outperform, but expect choppy action in high-growth tech as the market digests slower-than-expected easing.

More Information in our Economic Calendar.