Day: 19 December 2024

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Fed cuts interest rate by 0.25% – indicates fewer cuts in 2025

U.S. interest rate

The Federal Open Market Committee (FOMC) cut its borrowing rate to a range of 4.25% – 4.50%, mirroring its December 2022 level.

The Fed indicated that it probably would only lower twice more in 2025, according to the closely watched ‘dot plot’ matrix of individual members’ future rate expectations

While the decision itself was closely watched, the primary concern centered on what they would communicate regarding its future direction, considering inflation remains above and economic growth is relatively – conditions that do not typically align with easing.

The Fed said that it would probably only lower the interest rate twice in 2025. The markets reacted with a sharp pullback with the Dow hitting a 10-day losing streak – last seen in 1974.

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Dow down again – falling for 10th consecutive day

Dow down

The Dow Industrial Average dropped 1,123 points to 42,326.87, marking its 10th consecutive day of decline and the longest since 1974.

The Dow is lining up for potentially its worst weekly performance since March 2023.

The S&P 500 fell 2.95% to 5,872.16, while the Nasdaq Composite decreased 3.56% 19,392.69 as losses in the tech-heavy index accelerated at the end of the session.

Both the 30-stock Dow and the S&P 500 recorded their largest one-day loss since August 2024.

The Dow and most other indices reacted badly to the Feds interest prediction for 2025 – suggesting ‘maybe’ only two more rates cuts to come.

Dow Jones one-day chart 18th December 2024 (after FOMC interest rate announcement)

Dow Jones one-day chart 18th December 2024 (after FOMC interest rate announcement)