Stock market today: S&P 500, Nasdaq slip as Federal Reserve ushers in first rate cut of 2025

Stock closed the session mixed on Wednesday after the Federal Reserve cut the fed funds rate by 25 basis points.

Chair Jerome Powell said the decision could be seen “in a way as a risk-management cut” amid a deteriorating labor market environment.

The S&P 500 (^GSPC) slipped 0.1%, while the Dow Jones Industrial Average (^DJI) rose 0.5%. The Nasdaq Composite (^IXIC) dropped 0.3%.

The decision by the Federal Reserve to cut rates was highly anticipated by the market given persistent signs of a labor market slowdown. However, Fed officials have also had to take into account elevated levels of inflation in recent weeks.

Fed Chair Jerome Powell highlighted the central bank’s difficult task of balancing its dual mandate of price stability and maximum employment.

The Federal Reserve’s decision to cut rates by 25 basis points comes as the job market shows signs of slowing, while inflation remains elevated.

“There are no risk-free paths now,” Powell said, noting a wide dispersion of forecasts among Fed policymakers.

During the press conference following the decision, Powell described the move as “a risk management cut.”

Fed Chair Jerome Powell emphasized the limits of the central bank’s economic projections on Wednesday, underscoring that policymakers remain data-dependent even as the Fed embarks on a new easing cycle.

“It’s an accumulation of the individual projections of 19 people,” Powell said. “We’re not on a preset path. Actual decisions will be based on the incoming data, the evolving outlook, and the balance of risks.”

That balance of risks, Powell noted, is unusually complex: “Ordinarily, when the labor market is weak, inflation is low. And when the labor market is really strong, that’s when you should be careful about inflation. We have a situation where we have two-sided risk. There’s no risk-free path.”

The Summary of Economic Projections showed a wide range of views among Fed officials, with most penciling in at least one additional cut this year. But opinions diverged on how far policy should ease.

Powell said the dispersion was “natural” given the highly “unusual” backdrop facing the US economy.

“It would actually be surprising if you didn’t have a pretty wide range of views in this kind of situation,” he said.

Federal Reserve Chair Jerome Powell framed the central bank’s rate cut as a way to guard against rising risks in the labor market.

“Yeah, I think you could think of this in a way as a risk-management cut,” Powell told reporters during his post-decision press conference.

Powell noted that the Fed’s Summary of Economic Projections still shows slightly stronger growth for this year and next, with inflation and unemployment largely unchanged. What has shifted, he said, is the outlook for the labor market, where the risks now look far more pronounced.

“We were looking at 150,000 jobs a month at the time of the last meeting,” he explained. “And now we see the revisions and we see the new numbers, and I don’t want to put too much emphasis on payroll job creation, but it’s just one of the things that suggests that the labor market is really cooling off.”

That, Powell said, was the reason for acting now: “That tells you it’s time to take that into account in our policy.”

Fed Chair Powell acknowledged growing cracks in the labor market on Friday, citing particular strain for young workers and recent graduates.

He pointed to those “on the margin” — recent grads, younger workers, and minorities — who are struggling to find jobs.

“The overall job-finding rate is very, very low,” he said. “However, the layoff rate is also very low. So you’ve got a low firing, low hiring environment. And the concern is that if you start to see layoffs … there won’t be a lot of hiring going on.”

That backdrop echoes recent data showing the unemployment rate for Americans ages 16 to 24 climbed above 10% in August for the first time since the pandemic. For recent college graduates, the picture is also troubling: Their jobless rate now exceeds that of the broader workforce for the first time in more than a decade, according to Bank of America Institute analysis of BLS and Census Bureau data compiled by the New York Fed.

Powell warned that in a “healthier economy,” displaced workers would be able to quickly find new opportunities, but today’s weak hiring rate raises the risk of unemployment rising more sharply.

“That’s been a growing concern over the last few months,” he said.

Powell was asked repeatedly about persistent inflation and whether the Fed’s 2% target is achievable.

“No one really knows where the economy will be in three years,” said Powell.

However, the Fed chair reiterated that the base case is that tariff impacts will result in a one-time price jump and inflation should not remain persistent, especially given a weaker labor market.

The Federal Reserve’s latest “dot plot,” which outlines policymakers’ interest rate projections, now signals two additional rate cuts in 2025, on top of the quarter-point move announced Wednesday.

That path would bring the benchmark rate down to a range of 3.50% to 3.75% by year-end.

On Wednesday, the Fed lowered its benchmark rate by 0.25 percentage points to a range of 4.00% to 4.25%, marking its first cut of the year. Back in June, officials had penciled in two cuts in total, which would have taken the benchmark to a range of 3.75% to 4.0% by December.

Alongside the policy decision, the Fed released updated economic forecasts in its Summary of Economic Projections (SEP), offering fresh insight into how officials expect growth, inflation, and unemployment to evolve in the months ahead.

The central bank raised its projections for economic growth at the end of the year and held steady its forecast for inflation and unemployment, although the central bank did say in its policy statement that the downside risks to employment have risen.

Read more here.

Powell was asked about tariffs and the deteriorating labor market. The Fed chair indicated the impact has been seen on inflation.

“We have begun to see goods prices showing through into higher inflation, and actually the increase in goods prices accounts for most of the increase in inflation, or perhaps all of the increase in inflation over the course of this year,” he said.

Fed Chair Jerome Powell acknowledged on Wednesday that the labor market has been deteriorating, while inflation has risen recently and remained somewhat elevated.

“Overall, the market slowing in both the supply of and demand for workers is unusual,” said Powell during the Federal Reserve’s press conference following a two-day policy meeting.

“In this less dynamic and somewhat softer labor market, the downside risks to employment appear to have risen,” he added.

Powell’s comments come after Fed officials voted to cut rates by 25 basis points on Wednesday.

The bullish reaction in stocks immediately following the Fed decision faded with just 15 minutes to go before Fed Chair Jerome Powell speaks at his 2:30 p.m. ET presser on Wednesday.

The S&P 500 (GSPC), which briefly turned green, fell 0.2%, while the Nasdaq Composite (IXIC) deepened losses, dropping 0.7%.

The Dow Jones Industrial Average (^DJI), which had surged as much as 1%, trimmed gains to 0.7%.

The S&P 500 (^GSPC) turned positive after the Federal Reserve cut the fed funds rate by 25 basis points, to a new range of 4%-4.25% and signaled two more rate cuts this year.

The decision was not unanimous. Fed governor Stephen Miran preferred to cut by 50 basis points instead of 25.

The Dow Jones Industrial Average (^DJI) moved up more than 1%, while the Nasdaq Composite (^IXIC) trimmed session losses, but still stayed in red territory.

The Federal Reserve cut the fed funds rate by 25 basis points on Wednesday, in a move highly anticipated by the markets.

The decision comes after a two-day policy meeting in which policymakers had to consider signs of a deteriorating labor market and inflation, which has remained above the central bank’s 2% target.

Yahoo Finance’s Brian Sozzi writes:

Read the full story here.

Cracker Barrel (CBRL) is set to report its quarterly results Wednesday after market close.

The stock has faced a turbulent month as investors responded to backlash against its new logo and redesigns.

The company has since reverted to its previous logo and paused restaurant redesigns. Now, investors are eager to hear more about how its the logo-related ‘hubbub’ drove near-term traffic to the country restaurant.

Based on Bloomberg consensus estimates, Wall Street expects Cracker Barrel’s fourth quarter revenue for its 2025 fiscal year to fall 4% from a year ago to roughly $855 million and adjusted earnings per share to fall 22% to $0.76 from $0.98. Its fourth quarter ended Aug. 1, prior to the unveiling of the company’s new logo on Aug 19.

Despite the recent noise, same-store sales for the quarter are expected to rise 3.49% compared to the 0.45% decline it saw in the same time period last year.

For the full year, Cracker Barrel previously said it expected fiscal 2025 revenue to come in between $3.45 billion and $3.5 billion.

Investors are also eyeing the company’s long-term outlook. Cracker Barrel previously said it projects 2027 sales between $3.8 billion and $3.9 billion.

At the time of that multiyear guidance, the company said it was in the “process of testing [restaurant] remodel prototypes” and expected “to complete 25 to 30 remodels in fiscal 2025.”

But those remodels have been suspended, and Cracker Barrel has said it will instead invest in its existing restaurants “to make sure that they are in good shape” and meet customers’ expectations.

The stock is down roughly 4% year to date, compared to the S&P 500’s (^GSPC) 12% gain.

Reddit stock pared losses from earlier in the trading session after Bloomberg reported that the social media platform is in talks with Google for its next content-sharing agreement.

Reddit shares sank as much as 6.5% Wednesday but were down a more modest 3% in afternoon trading following the Bloomberg report.

The outlet said Reddit is in talks with the tech giant to more deeply integrate its data into Google’s AI products following a $60 billion content sharing deal at the start of 2024. Bloomberg reported that Reddit is also talking with ChatGPT-maker OpenAI and Google to be paid more as its role in the companies’ AI products becomes more important.

Opendoor’s (OPEN) stock moved up nearly 16% in morning trading to trade above $10, for a gain of nearly 225% over the past month.

Shares in the operator of the iBuyer platform, which uses algorithms to flip houses, have risen since it hired Shopify’s COO Kaz Nejatian as its new CEO.

The real estate platform provider has just marked its first quarter of positive adjusted earnings in Q2. Its share price has gained more than 760% in the past six months, leading some to consider it a meme stock.

Hims & Hers Health (HIMS) stock fell nearly 3% on Wednesday morning, after dropping nearly 6% in the previous trading session.

The declines come after the US Food and Drug Administration sent the telehealth platform provider a warning letter last week. The FDA said Hims & Hers made false or misleading claims in its online marketing of its compounded semaglutide products.

HIMS stock has had a volatile year so far, but the San Francisco company’s shares are up roughly 104% in 2025. In June, the stock suffered after Danish pharmaceutical giant Novo Nordisk (NVO) ended its partnership with Hims & Hers, accusing it of “deceptive” marketing.

HIMS is one of the top 10 most-shorted stocks in the US, according to S&P Global Market Intelligence Data, with some 30% of shares currently sold short.

Oracle shares fell more than 2% early on Wednesday, halting its recent rally for now.

The AI cloud provider’s stock has been on a tear after its latest quarterly financial report showed a massive backlog of contracts in its cloud business, reportedly led by OpenAI.

Adding to that winning streak was Oracle’s reported role in a preliminary US-China deal for TikTok to continue operations in the US ahead of a ban. The deal is expected to be finalized on Friday during a call between Trump and Chinese President Xi Jinping.

Oracle’s upswing added $193 billion to the software giant’s market cap. But that gain has sparked bubble fears, given the stock is now more expensive than eight of the nine most valuable companies in the S&P 500 (^GSPC).

Plus, concerns have persisted over Oracle’s reliance on OpenAI and the ChatGPT maker’s ability to fund its reported $300 billion deal with the software giant.

Yahoo Finance’s Jennifer Schonberger reports:

Read the full story here.

Nvidia (NVDA) shares fell 2% after the market open on Wednesday, as investors weighed a Financial Times report that Chinese authorities told leading tech companies in the country not to use Nvidia’s AI chips.

“The decision underscores Beijing’s push to cut reliance on US semiconductors amid intensifying AI competition with the US and the promotion of domestic chip and tool utilization,” Hedgeye Risk Management analyst Felix Wang wrote in a note after the news.

China’s internet regulator told companies to halt orders of the RTX Pro 6000D, which Nvidia custom-made for customers in the country.

Nvidia CEO Jensen Huang has repeatedly stressed the importance of the Chinese AI market, what he sees as a rapidly growing $50 billion market opportunity.

The exec lobbied the Trump administration to lift a US ban on exports of its lower-power H20 chips to China this summer in an unprecedented deal that involved Nvidia sharing its revenue from those sales with the government. Huang said in August that Nvidia is working on a less powerful version of its Blackwell chips for China.

But Huang told reporters during a briefing in London on Wednesday: “I think that we could only be in service of a market if the country wants us to be.”

“I’m disappointed with what I see, but they have larger agendas to work out, you know, between China and the United States, and I’m understanding of that, and we’re patient about it,” he added.