(Reuters) -U.S. stocks plunged on Wednesday after the Federal Reserve cut interest rates by a quarter of a percentage point and the central bank’s economic projections signaled a slower pace of cuts next year.
According to preliminary data, the S&P 500 lost 2.96%, while the Nasdaq Composite lost 3.62% and the Dow Jones Industrial Average fell or 2.61%.
The Dow suffered its 10th straight session of declines, to mark its longest daily streak of losses since an 11 session skid in October 1974. The Dow and S&P saw their biggest one-day percentage decline since Aug. 5 and the Nasdaq saw its biggest daily decline since July 24. The small cap Russell 2000 dropped 4.4%, its biggest drop since June 16, 2022.
COMMENTS:
GENE GOLDMAN, CHIEF INVESTMENT OFFICER AT CETERA INVESTMENT MANAGEMENT, EL SEGUNDO, CA
“Investors had hoped he’d backtrack on some of the comments in the statement. But in actuality, he just doubled down. He’s worried about inflation, he’s worried about the uncertainty. The Fed needs a slow rate cuts.”
“Everything in the dot plot suggested that we have higher economic growth, a stronger labor market, more inflation, fewer Fed rate cuts and a higher neutral rate.”
“Taking all this together, it’s concerning for markets because markets, with high valuations, were pricing in everything being perfect. No changes, no uncertainty. This basically adds more uncertainty the markets have not priced in.”
“The market finally saw the news and they said, ‘OK, this is actually going to happen. The Fed will not cut rates as much.’ None of the information that came out today was a surprise.”
ROBERT PAVLIK, SENIOR PORTFOLIO MANAGER AT DAKOTA WEALTH IN FAIRFIELD, CONNECTICUT
“It’s a little surprising the way the market reacted it’s very much sell on the news. Did what Powell say make it worse? I don’t think it helped, so what I saw is some selling pressure spiraling into more selling pressure and then it develops into an 1100 point down day.”
“I don’t think it’s logical, everything that happened since the action by the Fed was largely expected. You got a cut and you have a Fed that’s on hold.”
“The question I’ve been asked is will this last? It will last into tomorrow, but then you’ll have to determine how much pressure is coming in. Is it just the reaction selling pressure or is it pulling people who are locking in profits that may have been waiting until the early part of 2025 before selling. If it’s the latter, then you have to wait for some kind of consolidation before stepping in and you’ll be able to tell if it’s one or the other by the volume and the size of the movements.”
