U.S. stock indexes ended mixed on Wednesday as investors reacted to comments from Federal Reserve Chair Jerome Powell, who tempered expectations for more rate cuts this year. The S&P 500 closed flat, the Dow Jones fell by 0.16%, and the Nasdaq 100 rose by 0.41%.
The Fed cut its benchmark rate by 25 basis points to a target range of 3.75%–4.00% and announced that quantitative tightening will end on December 1. However, Powell emphasized that another rate cut in December is “far from a foregone conclusion,” pushing the 10-year Treasury yield up to 4.07% and putting pressure on equities.
Early Optimism Fades
Stocks opened higher, with all three major indexes hitting record highs earlier in the session. Optimism was fueled by easing trade tensions between the U.S. and China after President Trump said he was considering reducing tariffs on Chinese imports from 20% to 10% if Beijing cooperated in addressing the fentanyl crisis.
In addition, the U.S. and South Korea finalized a trade agreement involving $150 billion in South Korean investments in U.S. shipbuilding and a 15% cap on tariffs for South Korean exports. However, enthusiasm faded quickly after Powell’s press conference cooled hopes for continued monetary easing.
Semiconductor stocks rallied after Trump said he was open to allowing China access to Nvidia’s Blackwell AI chips as part of a potential trade deal. Nvidia shares gained over 2%, while Broadcom, Lam Research, and Applied Materials jumped more than 3%.
Among individual gainers, Teradyne surged 20% and Seagate rose 19% after stronger-than-expected earnings. Centene added 12%, Caterpillar gained 11%, and Cognizant climbed 5% on upbeat results.
Corporate Misses Weigh on the Market
Fiserv plunged 44% after slashing its profit forecast, while Avantor dropped 23% and Garmin lost 11%. Boeing shares fell 4% following a larger-than-expected quarterly loss. Verisk and Mondelez also disappointed investors with weaker guidance, dragging down the Dow Jones index.
Political and Economic Risks Grow
The ongoing U.S. government shutdown, now in its fifth week, continues to strain market sentiment and delay key economic reports. Bloomberg Economics estimates that about 640,000 federal workers are furloughed, potentially raising the unemployment rate to 4.7%.
Overseas, sentiment was more positive. Europe’s Euro Stoxx 50 hit a record high, Japan’s Nikkei 225 surged 2.17%, and China’s Shanghai Composite rose 0.7% to a 10-year high.
Looking Ahead: All Eyes on December
Markets currently price in a 67% chance of another 25-basis-point cut at the Fed’s December meeting. Despite Powell’s cautious tone, traders still expect total policy easing of about 74 basis points by the end of 2026.
The focus now shifts to corporate earnings from major tech players — Alphabet, Meta, Microsoft, Apple, and Amazon. Their performance will likely shape market sentiment heading into November.
The Fed confirmed a cautious path toward easing but made clear that aggressive rate cuts are off the table for now. Markets, accustomed to central bank support, took Powell’s words as a signal for a pause — leaving investors to focus on earnings, trade negotiations, and the broader economic outlook.
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