US stocks end mixed as Fed cuts interest rates for 1st time in 2025

ISTANBUL

The New York Stock Exchange ended midweek with mixed results, after the Federal Reserve cut the policy rate by 25 basis points, marking the first rate cut of 2025.

The Dow was up 0.57%, or 260.42 points, to close at 46,018.32.

On the other hand, the Nasdaq dropped 0.33%, or 72.63 points, to close at 22,261.33, while the S&P 500 fell 0.1%, or 6.41 points, to 6,600.35.

The mixed course followed the Fed's decision to slash the federal funds rate by 25 basis points, between the range of 4% - 4.25%.

The central bank said it is attentive to the risks to both sides of its dual mandate and saw downside risks to employment have risen.

Fed Chair Jerome Powell called the decision a "risk-management cut," indicating that it was an insurance move against a further slowing in the job market.

“The marked slowing in both the supply of and demand for workers is unusual in this less dynamic and somewhat softer labor market,” he said.

He stated that the slowing in the job market is mostly due to lower immigration and lower labor force participation.

Also touching on the tariff issue and its effect on inflation, Powell said changes to government policies continue to evolve and their effects on the economy remain uncertain.

"Higher tariffs have gone to push up some prices in some categories of goods but their overall effect on economic activity and inflation remain to be seen," he said.

Powell said a reasonable base case is that the effects on inflation will be relatively short-lived -- a one-time shift in the price level.

"But it is also possible that the inflationary effects could instead be more persistent and that is a risk to be assessed and managed. Our obligation is to ensure that a one-time increase in the price level does not become an ongoing inflation problem," he added.

Fed revealed, meanwhile, that it is predicting one policy rate cut in 2026, less than anticipated, according to the central bank's median projections.

The bank'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.

It is comparable to a consensus projection of 3.6% for the year-end in 2025 after two anticipated cuts in addition to Wednesday's cut.

The projection is less than expected in the markets, where two or three rate cuts are expected next year.