Fed's Message to Slow Down Interest Rate Cuts Shakes Wall Street

Forex - The announcement by Fed Chair Powell that they will be moving more slowly and cautiously regarding future interest rate cuts shook Wall Street and led to declines in stocks. The S&P 500 index experienced its worst drop on a rate decision day since 2001. The index, which fell below the 6000-point level, ended the day down 2.95% at 5872.10.

The last time the S&P 500 saw such a significant loss on a Fed decision day was on September 17, 2001, when the index dropped by approximately 5%. Yesterday, the Dow Jones Industrial Average lost 2.58%, while the Nasdaq Composite Index fell by 3.56%.

Futures markets are displaying a mixed trend this morning. The futures S&P 500 index is up by 0.15%, while the Nasdaq 100 is down by 0.02%.

Max Gokhman, senior vice president at Franklin Templeton Investment Solutions, referred to Powell as a "hawk in dove's clothing." Gokhman stated, "While he boasts about the strength of economic momentum, he downplays the recent slowdown in disinflation, implying that tariffs will not be wiped out temporarily and that two cuts for 2025 are necessary because the policy must remain restrictive."