Dow plunges by more than 1,100 points after Fed projects fewer rate cuts next year
Dow plummets on Fed rate outlook, drops by 1,100 points
The Dow fell by 1,123 points Wednesday, ending the day 2.58% lower after the Federal Reserve indicated in a policy statement that it is forecasting just two interest rate cuts in 2025, not the previously projected four.
Fed Chair Jerome Powell also refused to say the central bank would not hike rates, telling reporters Wednesday: “You don’t rule things completely in or out in this world.”
This was the 10th day of losses for the blue-chip index and marked the first such losing streak since 1974, when Gerald Ford was president. However, the previous days’ losses were nowhere near the rapid decline seen Wednesday.
Wall Street had expected the Fed to cut rates, but the statement that it is expecting just two rate cuts in 2025 fueled a broad selloff.
Jay Hatfield, CEO and CIO at Infrastructure Capital Advisors, said stocks fell in response to the Fed’s “hawkish cut,” which means implementing a rate cut while signaling that monetary conditions might remain tight in the future.
“The Fed’s admitted uncertainty as to monetary policy actions in 2025, combined with the expectation of only two cuts (rather than four) in 2025 amplified investor uncertainty and concern, triggering profit taking this year versus delaying into the new year,” Sam Stovall, chief investment strategist at CFRA Research, said.
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