Stocks End Mixed After Fed’s First Cut of 2025; Yields Steady, Dollar Firms, Gold Cools From Record
ST. LOUIS, MO (STL.News) Stocks – U.S. stocks closed mixed Wednesday after the Federal Reserve delivered a widely expected 25-basis-point rate cut, the central bank’s first reduction of 2025. The Dow Jones Industrial Average eked out a gain, while the S&P 500 and Nasdaq Composite slipped as investors parsed Chair Jerome Powell’s guidance on the pace of future easing and the strength of the labor market.
Market snapshot – Stocks
Stocks: The S&P 500 edged down about 0.1% to 6,600, the Nasdaq Composite fell roughly 0.3% to 22,261, and the Dow rose nearly 0.6% to 46,018. Small caps were slightly firmer, with the Russell 2000 up around 0.2%. Trading was choppy, with indexes swinging between gains and losses as Powell emphasized that future policy moves would remain data-dependent.
The policy pivot: a cut with an asterisk – Stocks
Stocks: The FOMC lowered the federal funds target range to 4.00%–4.25%, citing softer hiring and a modest uptick in unemployment as reasons to begin easing. The decision included one dissent in favor of a larger, half-point move—a reminder that while the committee agrees the next steps are down, it is not unanimous on how quickly to get there. The statement underscored “risk management” as inflation gradually moves closer to 2% while job growth cools. Powell reiterated that further cuts are possible, not promised, and will depend on incoming data across inflation and employment.
Rates and the dollar’s effect on Stocks.
Stocks: Treasuries were volatile around the announcement. Short-dated yields hovered slightly higher into the close, with the 2-year near 3.55%, while the 10-year steadied around 4.07%. That left the curve still relatively flat by historical standards, suggesting investors remain cautious about the growth outlook even as policy begins to loosen. The U.S. dollar firmed modestly late in the day as traders faded an initial dovish interpretation of Powell’s comments.
Commodities: gold cools from a record; oil shrugs
Stocks: Gold set a fresh intraday record near $3,707/oz before pulling back as the dollar firmed and real yields steadied; December futures settled fractionally lower, and spot prices were off just under 1% late afternoon. Silver and palladium slipped in sympathy, while platinum held steadier.
In the energy sector, government inventory data showed a larger-than-expected crude draw of approximately 9.3 million barrels, alongside a gasoline draw and a build in distillates. Even with the bullish headline for crude, WTI hovered near $64 and Brent around $68 as traders weighed soft distillate demand and a cautious global growth tone.
Movers & themes: AI, autonomous rides, and activism
Stocks: Megacap tech was the swing factor again. Nvidia traded lower on fresh headlines out of China related to AI chip procurement, pressuring AI-levered peers and the broader semiconductor complex. In software, Workday rallied after a large activist investor disclosed a multibillion-dollar stake and expressed management support. This unusual positioning nevertheless tends to concentrate attention on operating improvements and capital allocation. Lyft gained after its autonomous-vehicle partner outlined a 2026 joint launch in Nashville, offering a longer-run proof point for robotaxi commercialization and a potential incremental fee stream for platform partners.
What the fundamentals say
1) Growth and employment are the swing factors
Stocks: The Fed cut with an eye on a cooling labor market. Payroll growth has slowed from last year’s pace, job openings have eased, and the unemployment rate has moved up from cycle lows. Those developments give the committee cover to shift from a restrictive “hold” to measured easing. For equity investors, a gradual path lowers the discount rate without signaling an imminent recession—one reason stocks remain near records even as leadership rotates day-to-day.
2) Inflation progresses, but not “mission accomplished”
Inflation has decelerated meaningfully from its peak, but remains above the 2% goal. Policymakers highlighted two-sided risks: if they cut too slowly, the jobs picture could deteriorate; cut too quickly, and inflation could re-accelerate. Framing the move as a risk-management cut preserves optionality. It also means that the following major shifts are likely to be driven by the data flow—especially core inflation, wage growth, and jobless claims.
3) Corporate cash use is normalizing
After a burst of buybacks earlier this year, repurchases moderated in Q2 as boards balanced shareholder returns with conservative balance-sheet management amid still-elevated financing costs. The 12-month total remains enormous by historical standards and supportive for per-share earnings, but fewer “shock and awe” announcements suggest buybacks may provide a floor rather than a ceiling for equities if multiples stall.
4) Energy inventories show a split narrative
A big crude draw would normally lean bullish for oil prices, but the build in distillates (diesel and heating oil) complicates the picture. Distillates correlate more with industrial activity and freight, both of which have been sluggish. This split helps explain why crude didn’t rally harder: the supply side is tightening, but the demand side still has question marks—especially outside the U.S.
5) The dollar’s tug-of-war
The dollar attempted to weaken into the meeting before firming into the close, reflecting relative growth expectations and rate differentials. A stronger dollar tightens financial conditions at the margin and can weigh on commodities, part of why gold surrendered a slice of its record-setting gains. If the Fed ultimately eases faster than peers, the dollar tailwind could fade; for now, it remains a balancing force against looser domestic policy.
The technical picture
Stocks: Even with today’s small dip, the S&P 500 remains comfortably above key trend gauges:
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50-day moving average (50-DMA): ~6,407
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200-day moving average (200-DMA): ~5,994
Momentum has cooled from overbought but remains constructive. Daily RSI readings in the mid-60s indicate intense yet not extreme upside pressure, while stochastics remain elevated—classic signs of a durable uptrend characterized by shallow pullbacks. In practical terms, the primary trend is up, and dips toward the 50-DMA region (roughly 6,350–6,450) have been getting bought throughout the summer.
Breadth is more nuanced. The advance-decline lines have lagged at times, reminding technicians to respect the risk of a deeper consolidation if leadership continues to narrow further. For now, resistance sits in the 6,575–6,650 area, where recent rallies have stalled, while 6,500 and then the 50-DMA serve as initial downside checkpoints. The 200-DMA—still far below—remains the longer-term dividing line between bulls and bears.
Sector takeaways and style rotation
- Technology: The day’s soft spot, as semiconductor headlines weighed on AI-exposed names and the Nasdaq. Longer-duration growth remains sensitive to both real yields and incremental AI news flow.
- Software: A bright spot thanks to Workday’s activist news. When activists express confidence while pushing for operating improvements, it often acts as a tailwind for sentiment across the peer group.
- Transportation/Mobility: Lyft’s move on autonomous news highlights a theme that can resurface in waves: monetizing driverless rides at scale. While timelines remain long, each concrete milestone tends to re-rate sentiment for participants.
- Financials: Benefited from incremental steepening at the long end and the prospect of lower funding costs if the Fed proceeds with additional cuts.
- Defensives: Held their ground as investors balanced a cautious macro outlook with the supportive signal from policy easing.
Strategy lens: what today means for the weeks ahead
Gold: a pause that refreshes?
Fresh all-time highs followed by a measured pullback is classic “trend within a trend” behavior for gold. With central-bank buying still robust and macro hedging in demand, dips may remain shallow unless real yields push materially higher. Short-term traders will watch the prior record (near $3,707) as a decisive pivot level; long-term allocators may rebalance.
Oil’s mixed message
The crude draw argues for supply tightness—exports strong, imports light—yet distillate builds flag soft industrial demand. For equities, that split can support airlines and consumer-facing groups (cheaper fuel) more than energy producers (soft prices despite “bullish” inventory math).
Easing without euphoria
The Fed is easing, but carefully. That mix tends to support duration-sensitive assets (quality growth, profitable tech) as long as earnings remain intact. If the labor trend weakens faster than expected, defensive and dividend-growth stocks could lead. If inflation proves stickier and curbs the path of future cuts, expect a range-bound S&P marked by sector rotation rather than a straight-line rally.
Key watch-levels
- S&P 500: Resistance around 6,650 (recent stall zone); support near 6,500, then the 50-DMA around 6,407.
- 10-Year Treasury: A 3.90%–4.15% band has contained much of the summer. A breakout either way will likely set the tone for rate-sensitive groups.
- U.S. Dollar Index: Sustained closes above the upper-90s would tighten financial conditions; pullbacks toward the mid-90s would ease pressure on commodities and multinationals.
Bottom line
The headline reads “Fed cuts,” but the subtext is “steady hands.” Stocks stayed near records even as leadership flipped intraday. Rates no longer feel like a one-way headwind, the dollar has stabilized for now, gold cooled from a fresh record, and oil is wrestling with a bullish draw against soft distillate demand. From here, the path of policy will be set by the path of data—especially jobs and inflation, which is particularly relevant for traders, arguing for honoring the prevailing uptrend while respecting nearby resistance. For longer-term allocators, it supports staying invested with an emphasis on balance-sheet strength, durable cash flows, and the flexibility to rotate as leadership shifts.
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