US stocks end with gains after Fed cuts rates again

ISTANBUL

US stocks ended with gains Wednesday after the Federal Reserve cut its policy rate by 25 basis points, as widely expected.

The Dow Jones Industrial Average was up 1.05%, or 497.46 points, to close at 48,057.75.

The Nasdaq rose 0.33%, or 77.67 points, to end at 23,654.16, while the S&P 500 gained 0.67%, or 46.17 points, to 6,886.68.

The Volatility Index (VIX), also known as the "fear index," fell 6.85% to 15.77.

The gains followed the Fed's decision to cut the federal funds rate by 25 basis points for the third time this year to 3.5%-3.75%.

The central bank said in its monetary policy statement that the downside risks to employment have risen in recent months and that inflation has moved up since earlier in the year and remains "somewhat" elevated.

"Job gains have slowed this year, and the unemployment rate has edged up through September. More recent indicators are consistent with these developments," it said.

At the post-meeting press conference, Fed Chair Jerome Powell ruled out the possibility of a rate hike in future meetings, saying: “I don’t think that a rate hike...is anybody’s base case at this point. I’m not hearing that.”

Powell cited President Donald Trump's broad tariffs as a source of inflation, saying: “It’s really tariffs that’s causing most of the inflation overshoot."

He said, however, that the tariffs will most likely result in a "one-time" spike in pricing, adding: "Our job is to make sure that it is."

Powell also said the central bank is “well positioned to determine the extent and timing of additional adjustments based on the incoming data, the evolving outlook of the balance of risks.”

Meanwhile, the Fed's "dot plot," which anonymously displays expectations of 19 different members, showed a median projection of 3.4% for the federal funds rate at the end of 2026, indicating just one more rate cut next year.

It did not change from the central bank's previous projections in the last quarter.

For 2027, the Fed predicted that the terminal rate would reach 3.1%, implying one more rate reduction. The dot plot indicated that the rate is anticipated to stay constant in 2028.

On the data side, the US federal government's budget deficit fell by 53% in November compared to the same month last year, dropping to $173 billion.