Wall Street emerged largely unshaken from a high-stakes Federal Reserve meeting, as policymakers delivered a well-telegraphed rate cut that elicited muted moves across markets.
The announcement was followed by Jerome Powell’s remarks, underscoring the tension between the Fed’s two mandates that suggested “there’s no risk-free path” ahead. After briefly rising, the S&P 500 fell by a mere 0.1%, weighed down by tech. Bonds saw small losses. It was the seventh straight time the dollar rose on a Fed day, the longest such winning streak since 2001.
The reaction reflected a central bank striking a temperate posture — acknowledging cooling in the labour market and signalling it will remain data-dependent amid price risks.
The Federal Open Market Committee voted 11-1 to cut the target range for the federal funds rate to 4%-4.25%. Looking ahead, Powell said the Fed was now in a “meeting-by-meeting situation.”
Policymakers now see two additional quarter-point cuts this year. That’s one more than projected in June. They foresee one quarter-point cut in 2026 and one in 2027.
They also slightly upgraded their median outlook for growth in 2026. They also forecast modestly higher inflation next year.
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Wall Street’s Reaction:
Art Hogan at B. Riley Wealth:
As this is very much within consensus, we may see some short term “buy the rumour/sell the news” reaction in markets.
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Bret Kenwell at eToro:
In-line, in-line, in-line. The Fed delivered exactly what the market was expecting.
Will we see a classic “sell the news” reaction to the Fed announcement, particularly in the seasonally weak month of September? While markets could use a breather, bulls will likely line up to “buy the dip” provided that the economy avoids a recession and earnings expectations continue higher.
Ryan Detrick at Carson Group:
The door is open to more cuts later this year, but it is clear they are now more worried about the slowing labour market than inflation. All in all, today’s news didn’t rock the boat and there were no curve balls.
Gina Bolvin at Bolvin Wealth Management Group:
The Fed’s 25 basis point cut is a clear signal: the softening labour market and stubborn inflation have pushed policymakers to act — but gradually. This isn’t a pivot, it’s a measured step.
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For investors, this means modest rate relief, not fireworks. Rate-sensitive sectors like housing and consumer discretionary may benefit, but caution remains key. The Fed is walking a fine line, and upcoming inflation and jobs data will determine what comes next.
Peter Tchir at Academy Securities:
Everyone is just trying to digest things. A lot of algos are whipping things around. It does seem that a lot of dovishness was already priced in.
Christian Chan at AssetMark:
The dovish tone of the statement gave way to a more balanced message in the press conference during which Powell highlighted the risk that tariff-related inflation could be more than a one-time event.
Overall, today’s Fed action could be viewed as a “goldilocks” move for the markets – growth expectations higher, the Fed is very aware of the risks to both the labour market and inflation, more rate cuts to come.
Ronald Temple at Lazard:
Investors should beware of taking the “dot plot” to the bank, as this is clearly an FOMC where the policy path is still unclear and where rising inflation could lead to a very different outlook in the months ahead.
Steve Wyett at BOK Financial:
Overall this move by the Fed was widely expected. So it is not surprising the market reaction in stocks and bonds is a bit muted.
Powell’s tone and words in his press conference do indicate this was more a defensive move to avoid more weakness in the labor market and not one designed to spur a lot more growth. We think growth will be fine anyway.
Dan Siluk at Janus Henderson Investors:
The dot plot now implies two more cuts this year, but Powell downplayed its significance, framing the outlook as “more balanced” rather than decisively tilted toward labor market risks.
Markets may welcome the easing bias, but the messaging remains nuanced and far from a full pivot.
Eric Teal at Comerica Wealth Management:
Monetary policy actions were in line with our expectations with additional stimulus on the horizon. We are watching long rates closely as we anticipate the yield curve will steepen which bodes well for value-oriented sectors and smaller companies as the market broadens out.
Jim Baird at Plante Moran Financial Advisors:
For now, boosting labour conditions is taking centre stage. The path back to 2% inflation continues to lengthen, and the Fed’s dovish announcement today sends a clear message that they’re willing to live with moderately elevated inflation in the near term.
Luis Alvarado at Wells Fargo Investment Institute:
The restart of the rate cycle had been priced in the bond market expectations well in advance.
The threat of having both inflation and unemployment rising simultaneously continues to create a big headache for the Fed’s interest rate policy.
Under this level of uncertainty, we believe fixed-income investors may benefit from being exposed to the intermediate portion of the curve (3-7 year maturities), striking the best balance between attractive yield and less sensitivity to potential interest rate risk.
Jeff Roach at LPL Financial:
Investors are taking this decision in stride. As the risks to labour markets rise, we should expect further cuts in October and December.
Simon Dangoor at Goldman Sachs Asset Management:
The skew of the dot plot indicates that the Fed is likely to deliver 25bp cuts in October and December on top of today’s reduction. It would take a significant upside surprise in inflation or labour market rebound to take the Fed off its current easing trajectory.
