Major U.S. stock indexes edged mostly lower in afternoon trading Wednesday after the Federal Reserve lowered interest rates for the third time this year and hinted that it will take a pause from further rate cuts.
The Fed has been using its power to cut short-term interest rates in a bid to shore up the economy amid the costly impact from the U.S.-China trade war. The market was expecting another cut this month, which shifted the focus to any clues the Fed might give about the prospects of further rate reductions.
A statement released after its latest policy meeting removed a key phrase that the Fed had used since June to indicate a future rate cut is likely. This could be a signal that Fed officials will prefer to leave rates alone while they assess how the economy fares in the months ahead.
Health care and technology companies drove much of the gains, offsetting losses in energy stocks and elsewhere in the market.
Financial stocks also took losses as bond yields fell. The yield on the 10-year Treasury note dropped to 1.80% from 1.83% late Tuesday. The yield is a benchmark for interest rates that bank charge for mortgages and other loans.
Beyond the Fed, investors have been focusing on a steady flow of corporate earnings, along with key economic reports. Apple, Facebook and Starbucks will report their earnings later Wednesday.
KEEPING SCORE: The S&P 500 index fell less than 0.1% as of 2:24 p.m. Eastern time. The Dow Jones Industrial Average rose 16 points, or 0.1%, to 27,087. The Nasdaq fell less than 0.1%. The Russell 2000 index of smaller company stocks dropped 0.8%.
Major stock indexes in Europe were mostly higher.
FED WATCH: The central bank’s latest move reduces the short-term rate it controls — which influences many consumer and business loan rates — to a range between 1.5% and 1.75%.
The Fed has now cut rates three times this year, nearly reversing the four rate hikes that the central bank made in 2018.
Rising global risks have led the Fed to change course and begin easing credit. Lower rates are intended to encourage more borrowing and spending. Powell has said that the central bank’s rate reductions are intended as a kind of insurance against threats to the economy, which is in its 11th year of expansion, fueled by consumer spending and a solid if slightly weakened job market.
GOOD ENOUGH GROWTH: The U.S. economy slowed to a modest growth rate of 1.9% in the July-September quarter, but still surpassed economists’ forecasts for even weaker growth. The Commerce Department reported that consumer spending downshifted and businesses continued to trim their investments in response to trade war uncertainty and a weakening global economy.
Gross domestic product, which is the economy’s total output of goods and services, grew at a 2% rate in the second quarter.
PLAYING NICELY: Mattel surged 13.1% after the toy maker breezed past Wall Street’s third-quarter profit forecasts on strong sales of its Barbie and Hot Wheels brands. The company also put investors at ease when it said that it hasn’t seen any impact from tariff increases on toys imported from China ahead of the Dec. 15 deadline.
Key rival Hasbro said last week that the trade war is wreaking havoc on the company’s supply chain and creating confusion among retail customers for its toys.
CASH FLOW JOLT: General Electric jumped 9.2% after the industrial conglomerate raised its projections for a key measure of profitability despite a damaging trade fight and ongoing problems with Boeing’s 737 Max, which GE helps make engines for.
CLOGGED TAP: Molson Coors Brewing, which trades under the symbol “TAP”, fell 3.6% after announcing a restructuring plan as it faces declining beer sales. The company is laying off 500 workers worldwide as it streamlines operations in an effort to bring new products to market more quickly, like the canned wine and hard coffee it introduced this year.
AP Business Writer Damian J. Troise contributed.
Alex Veiga, The Associated Press