Fed Delivers Large Rate Cut In Bid To Sustain Labor Market; Stocks, Gold Set New Record Highs: This Week In The Markets

The Federal Reserve cut interest rates by 50 basis points at its September meeting, lowering the target range to 4.75%-5%. This bold move defied the predictions of most economists who had anticipated a more modest 25-basis-point reduction.

The Fed also hinted at the potential for additional cuts in the coming months, with the updated dot plot revealing a more aggressive rate-cutting trajectory than forecasted in June.

Fed Chair Jerome Powell highlighted the labor market as a key focus, stressing the importance of acting preemptively to sustain robust employment. “The time to support the labor market is when it's strong, not when you begin to see layoffs,” Powell said.

Powell also called for caution, framing the rate cut as part of a “recalibration” rather than a signal of a broader policy shift. He reiterated that future decisions would remain data-dependent, underscoring the Fed's flexibility in responding to economic conditions.

Wall Street analysts reacted by adjusting their rate cut forecasts more aggressively, reflecting expectations of a looser policy trajectory ahead.

Both gold prices and major U.S. stock indices, including the S&P 500 and Dow Jones, surged to record highs following the Fed’s decision.

Fed Fuels Growth

In an exclusive interview with Benzinga, a Lazard small-cap expert highlights the Federal Reserve’s shift to a pro-growth stance, which is expected to boost Russell 2000's performance. This policy pivot could create favorable conditions for investors in smaller companies, which trade relatively cheaper compared to large-cap counterparts.

Mortgage Demand Rises

Mortgage rates fell to near 6%, spurring a surge in demand for both refinancing and home purchases. As homeowners and buyers capitalize on these lower rates, market activity in the real estate sector is picking up momentum, with increased interest in locking in favorable mortgage terms.

iPhone Demand Lags

Early pre-order data for Apple Inc. AAPL’s iPhone 16 suggests weaker-than-expected demand, raising concerns about the device’s market performance. Ssome analysts believe Apple could still exceed expectations with potential surprises in upcoming earnings reports.

GM Expands Charging

General Motors Co. GM has enhanced electric vehicle charging access, opening 17,800 Tesla chargers to all GM drivers via an adapter. This move broadens charging options for GM’s EV customers, potentially boosting EV adoption and aligning with the company’s electrification goals.

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