Wall Street finishes higher after Fed cuts rates

Source: Xinhua | 2019-11-01

Wall Street pared earlier losses to finish higher on Wednesday after the Federal Reserve cut interest rates for a third time this year.
At the close, the Dow Jones Industrial Average advanced 115.27 points, or 0.43 percent, to 27,186.69. The S&P 500 increased 9.88 points, or 0.33 percent, to 3,046.77. The Nasdaq Composite Index gained 27.12 points, or 0.33 percent, to 8,303.98.
The morning session was negative as investors awaited Fed's momentary policy decision and Fed chief's comments to look for clues about the central bank's next move, Peter Tuchman, an experienced trader on the floor of the New York Stock Exchange, told Xinhua.
U.S. Federal Reserve on Wednesday afternoon lowered interest rates by 25 basis points amid a further slowdown in U.S. economic growth.
The Federal Open Market Committee, the Fed's rate-setting body, trimmed the target for the federal funds rate to a range of 1.5 percent to 1.75 percent after concluding its two-day policy meeting, largely in line with market expectation.
"We took this step to help keep the U.S. economy strong in the face of global developments and to provide some insurance against ongoing risks," Fed Chairman Jerome Powell told reporters at a press conference Wednesday afternoon, highlighting the risks of slowing global growth, trade policy developments, as well as muted inflation pressure.
The major indexes began to turn positive in the afternoon session, driven by the rate-cut move and Powell's comments which signaled it would be a while before the central bank hikes rates.
"Cutting interest rates is a stimulus package to the economy and the market, so investors love that," said Tuchman, adding the Powell's remarks were "sort of a positive reinforcement."
The Fed's decision followed the release of the U.S. economic growth data.
The U.S. economy expanded at an annual rate of 1.9 percent in the third quarter of the year, slightly lower than the 2-percent growth rate in the second quarter, the department of commerce reported on Wednesday. Economists polled by financial information website MarketWatch had forecast that the gross domestic product (GDP) would taper to 1.6 percent.
The slower GDP growth in the third quarter reflected decelerations in personal consumption expenditures and government spending, and a larger decrease in nonresidential fixed investment, according to the department.
The earnings season continued on Wednesday with a flurry of quarterly reports from big names including General Electric.
The industrial giant delivered quarterly results that topped analyst expectations, sending the stock up about 11.5 percent. The company also raised its 2019 cash flow forecast.
Of the S&P 500 companies that have reported quarterly earnings by far, about 74 percent have topped analysts' expectations, according to data from market information supplier FactSet.