Fed cuts interest rates by quarter-point and ends quantitative tightening early

[saidsimplesimon]

3. "Stocks turn negative"

Stocks turn negative after Fed decision to cut rates by quarter point
Published: July 31, 2019 2:24 p.m. ET

https://www.marketwatch.com/story/stocks-turn-negative-after-fed-decision-to-cut-rates-by-quarter-point-2019-07-31?mod=mw_quote_news

Chris Matthews Market Reporter

U.S. stocks flipped from modest gains to losses Wednesday afternoon, following the release of a decision by the Federal Reserve's interest-rate setting committee to cut the federal funds rate by a quarter point to between 2% and 2.25%, while ending its plan to reduce its balance sheet through the sale of government bonds two months earlier than expected. The Dow Jones Industrial Average DJIA, -0.14% fell by 77 points or 0.3%, to 27,125 and the S&P 500 SPX, -0.10% shed about 8 points, or 0.3% to 3,006. Meanwhile, the Nasdaq Composite index COMP, +0.10% lost 12 points, or less than 0.1% to 8,265. Lower interest rates are typically bullish for stocks, as they compress the yield investors earn on bonds and other debt, making equity investments more attractive in comparison. They also are thought to stimulate economic activity by lower borrowing costs for households and corporations. However, investors were widely expecting a 0.25% cut and equity investors appear to be disappointed the Fed didn't lower interest rates by more than a quarter point, or clearly signal that further rate cuts were on the way. Investors will get more clarity regarding the path of future policy during a press conference with Federal Reserve Chairman Jerome Powell, set to begin at 2:30 p.m. Eastern Time.