Stocks Join Bonds Lower as Fed Brings No Fireworks: Markets Wrap

(Bloomberg) — Wall Street emerged largely unshaken from a high-stakes Federal Reserve meeting, as policymakers delivered a well-telegraphed rate cut that elicited muted moves across markets.

The announcement was followed by Jerome Powell’s remarks, underscoring the tension between the Fed’s two mandates that suggested “there’s no risk-free path” ahead. After briefly rising, the S&P 500 fell by a mere 0.1%, weighed down by tech. Bonds saw small losses. It was the seventh straight time the dollar rose on a Fed day, the longest such winning streak since 2001.

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The reaction reflected a central bank striking a temperate posture — acknowledging cooling in the labor market and signaling it will remain data-dependent amid price risks.

The Federal Open Market Committee voted 11-1 to cut the target range for the federal funds rate to 4%-4.25%. Looking ahead, Powell said the Fed was now in a “meeting-by-meeting situation.”

Policymakers now see two additional quarter-point cuts this year. That’s one more than projected in June. They foresee one quarter-point cut in 2026 and one in 2027.

They also slightly upgraded their median outlook for growth in 2026. They also forecast modestly higher inflation next year.

Wall Street’s Reaction:

Art Hogan at B. Riley Wealth: As this is very much within consensus, we may see some short term “buy the rumor/sell the news” reaction in markets.

Bret Kenwell at eToro: In-line, in-line, in-line. The Fed delivered exactly what the market was expecting.

Will we see a classic “sell the news” reaction to the Fed announcement, particularly in the seasonally weak month of September? While markets could use a breather, bulls will likely line up to “buy the dip” provided that the economy avoids a recession and earnings expectations continue higher.

Ryan Detrick at Carson Group: The door is open to more cuts later this year, but it is clear they are now more worried about the slowing labor market than inflation. All in all, today’s news didn’t rock the boat and there were no curve balls.

Gina Bolvin at Bolvin Wealth Management Group The Fed’s 25 basis point cut is a clear signal: the softening labor market and stubborn inflation have pushed policymakers to act — but gradually. This isn’t a pivot, it’s a measured step.

For investors, this means modest rate relief, not fireworks. Rate-sensitive sectors like housing and consumer discretionary may benefit, but caution remains key. The Fed is walking a fine line, and upcoming inflation and jobs data will determine what comes next.

Peter Tchir at Academy Securities: Everyone is just trying to digest things. A lot of algos are whipping things around. It does seem that a lot of dovishness was already priced in.

Christian Chan at AssetMark: The dovish tone of the statement gave way to a more balanced message in the press conference during which Powell highlighted the risk that tariff-related inflation could be more than a one-time event.

Overall, today’s Fed action could be viewed as a “goldilocks” move for the markets – growth expectations higher, the Fed is very aware of the risks to both the labor market and inflation, more rate cuts to come.

Ronald Temple at Lazard: Investors should beware of taking the “dot plot” to the bank, as this is clearly an FOMC where the policy path is still unclear and where rising inflation could lead to a very different outlook in the months ahead.

Steve Wyett at BOK Financial: Overall this move by the Fed was widely expected. So it is not surprising the market reaction in stocks and bonds is a bit muted.

Powell’s tone and words in his press conference do indicate this was more a defensive move to avoid more weakness in the labor market and not one designed to spur a lot more growth. We think growth will be fine anyway.

Dan Siluk at Janus Henderson Investors: The dot plot now implies two more cuts this year, but Powell downplayed its significance, framing the outlook as “more balanced” rather than decisively tilted toward labor market risks.

Markets may welcome the easing bias, but the messaging remains nuanced and far from a full pivot.

Eric Teal at Comerica Wealth Management: Monetary policy actions were in line with our expectations with additional stimulus on the horizon. We are watching long rates closely as we anticipate the yield curve will steepen which bodes well for value-oriented sectors and smaller companies as the market broadens out.

Jim Baird at Plante Moran Financial Advisors: For now, boosting labor conditions is taking center stage. The path back to 2% inflation continues to lengthen, and the Fed’s dovish announcement today sends a clear message that they’re willing to live with moderately elevated inflation in the near term.

Luis Alvarado at Wells Fargo Investment Institute: The restart of the rate cycle had been priced in the bond market expectations well in advance.

The threat of having both inflation and unemployment rising simultaneously continues to create a big headache for the Fed’s interest rate policy.

Under this level of uncertainty, we believe fixed-income investors may benefit from being exposed to the intermediate portion of the curve (3-7 year maturities), striking the best balance between attractive yield and less sensitivity to potential interest rate risk.

Jeff Roach at LPL Financial: Investors are taking this decision in stride. As the risks to labor markets rise, we should expect further cuts in October and December.

Simon Dangoor at Goldman Sachs Asset Management: The skew of the dot plot indicates that the Fed is likely to deliver 25bp cuts in October and December on top of today’s reduction. It would take a significant upside surprise in inflation or labor market rebound to take the Fed off its current easing trajectory.

Corporate Highlights:

China’s internet watchdog has instructed companies including Alibaba Group Holding Ltd. and ByteDance Ltd. to terminate orders for Nvidia Corp.’s RTX Pro 6000D, the Financial Times reported, citing people with knowledge of the matter. This is a “counterproductive development,” US House Speaker Mike Johnson told CNBC. Apple Inc.’s smartphone sales in China in the weeks leading up to the iPhone 17 launch fell 6% from the year-earlier period, a deeper slump than is typical ahead of a new flagship product release. Reddit Inc. is in early talks to strike its next content-sharing agreement with Alphabet Inc.’s Google, aiming to extract more value from future deals now that its data plays a prominent role in search results and generative AI training. United Airlines Holdings Inc. Chief Executive Officer Scott Kirby says a lack of new aircraft is impeding his plans to modernize the fleet and cash in on booming premium travel. Cracker Barrel Old Country Store Inc. offered sales guidance for the current fiscal year that missed expectations, suggesting the brand is still dealing with the fallout from its controversial logo change. General Mills Inc. posted a solid quarter, but kept its outlook in place as the maker of Cheerios cereal called out consumers being cautious from economic uncertainty. Patients on Eli Lilly & Co.’s experimental diabetes pill lost more weight and had better blood sugar control than those on an older, approved rival from Novo Nordisk A/S in the first head-to-head trial of the two medicines. Gemini Space Station Inc. shares extended declines Wednesday to fall below its initial offering price within days of debuting as a public company in the US, tracking some cryptocurrency-related stocks lower. WaterBridge Infrastructure LLC shares rose 14% in their trading debut after the water infrastructure company raised $634 million in an initial public offering that priced at the top end the marketed range. Lyft Inc. is partnering with Waymo for the first time to offer robotaxi service in Nashville starting next year, a deal that helps it better compete with rival Uber Technologies Inc. General Motors Co. is in preliminary talks to renew its longtime joint venture with China’s SAIC Motor Corp., signaling the US automaker’s budding optimism about its business in the world’s largest auto market after years of decline. StubHub Holdings Inc. priced its initial public offering at the midpoint of a marketed range to raise $800 million, capping co-founder Eric Baker’s years-long pursuit of a listing for the ticket-selling platform. Artificial intelligence chip startup Groq Inc. raised $750 million at a post-funding valuation of $6.9 billion, highlighting investor interest in companies seeking to alleviate a shortage of chips and computing power for AI workloads. Rithm Capital Corp. agreed to buy Paramount Group Inc., an office landlord in New York and San Francisco, for about $1.6 billion. Manchester United, the Premier League’s fallen giant, is struggling to keep tabs with its larger rivals after revenues flat-lined and losses continued to mount. British drugmaker GSK Plc pledged to invest $30 billion in the US over the next five years, making the announcement as President Donald Trump arrived in the UK for a highly anticipated state visit. AstraZeneca Plc’s Fasenra failed to meet its goal in a late-stage trial of patients with chronic obstructive pulmonary disease for a second time, a blow to the drugmaker’s efforts to expand the market for the asthma treatment. Abu Dhabi National Oil Co. walked away from a proposed $19 billion offer for Australian natural gas producer Santos Ltd., saying a “combination of factors” discouraged it from making a final bid. Some of the main moves in markets:

Stocks

The S&P 500 was little changed as of 4 p.m. New York time The Nasdaq 100 fell 0.2% The Dow Jones Industrial Average rose 0.6% The MSCI World Index fell 0.2% Bloomberg Magnificent 7 Total Return Index fell 0.4% The Russell 2000 Index rose 0.2% Currencies

The Bloomberg Dollar Spot Index rose 0.2% The euro fell 0.3% to $1.1826 The British pound was little changed at $1.3638 The Japanese yen fell 0.2% to 146.76 per dollar Cryptocurrencies

Bitcoin fell 1% to $115,693.15 Ether rose 0.5% to $4,523.64 Bonds

The yield on 10-year Treasuries advanced three basis points to 4.06% Germany’s 10-year yield declined two basis points to 2.68% Britain’s 10-year yield declined one basis point to 4.63% The yield on 2-year Treasuries advanced four basis points to 3.54% The yield on 30-year Treasuries advanced one basis point to 4.66% Commodities

West Texas Intermediate crude fell 0.9% to $63.94 a barrel Spot gold fell 0.8% to $3,661.40 an ounce –With assistance from Sid Verma, Denitsa Tsekova, Vildana Hajric and Lu Wang.

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