Stock Markets Plunge in Response to Fed Interest Rate Cut
The Federal Reserve interest rate cut came in at just a quarter of a percentage point, leading to the stock market dropping across the board and continuing days of declines.
There was some trepidation leading up to the interest rate cut announcement, as economists feared it would be miniscule. Those fears were justified on Wednesday as the Federal Reserve took a cautious approach to rate cuts and determined that they would only be reducing the rate by a quarter of a percentage point. Furthermore, the Fed promised that there would be only two more rate cuts to come in 2025, which is less than was originally expected.
[[DJIA-graph]]
The new stance on these cuts is that they must be enacted in extreme caution, and the Fed is pulling back on some previous plans to enact greater rate cuts. They are taking a more conservative approach now that the economy is pulling back a little and the stock market is not as healthy as it was in early November.
The Stock Market Reacts
As a result of the interest rate cut announcement primarily, the Dow Jones fell by 1,123 points, or 2.58% by the end of trading on Wednesday. The Nasdaq Composite fell too, with a drop of 3.56%, with the S&P 500 following at 2.95%.
These are dramatic drops and the most significant declines we have seen from the stock market in a while. The Dow Jones’ losing streak continues, setting records that rival the lows last seen during the Jimmy Carter administration.
Further impact on the stock market could be coming from political fronts. The US government could be entering a shutdown very soon, as a Republican-backed spending bill has been adamantly opposed by President-elect Donald Trump. Ir is up to Biden to approve the bill, though, and if he does not sign off on it, then the government shutdown is likely to start right away.
The current state of the stock market is affecting many of the major stocks, and we are seeing significant drops from Wal-Mart (1.96%), Disney (1.48%), Apple (2.14%), and more.
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