Defying predictions, the Federal Reserve made the bold move of cutting interest rates by 50 basis points Wednesday, lowering the target range to 4.75%-5%. Most economists had anticipated a more modest 25-basis-point reduction.
The Fed also hinted at the potential for additional cuts in coming months, revealing a more aggressive trajectory to take action that might be good news for borrowers than forecasted in June.
Fed Chair Jerome Powell highlighted the labor market as the key to its actions, 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.
Wall Street analysts reacted by adjusting their rate cut forecasts to align with 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 small-cap expert with financial services firm Lazard highlighted the Federal Reserve’s shift to a pro-growth stance, which is expected to boost the Russell 2000’s performance. The Russell 2000 index measures performance of smaller companies. This policy pivot could create favorable conditions for investors in smaller companies, which trade relatively cheaper compared with large-cap counterparts.
Mortgage demand rises
Mortgage rates fell to near 6%, down from 6.2% the prior week, 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.
GM expands charging options
General Motors has enhanced electric vehicle charging access, with 17,800 Tesla chargers opening to all GM drivers via an adapter. This move broadens charging options for GM’s EV customers, potentially boosting EV adoption and aligns with downscaled electrification goals. In June, the automaker reduced its target of how many EVs it would produce in 2024 to between 200,000 and 250,000.
More:GM lowers EV production targets amid slow demand, says EVs will show ‘variable profit’
iPhone demand lags
Early preorder data for Apple’s iPhone 16 suggests weaker-than-expected demand, raising concerns about the device’s market performance. Demand was likely down because the latest iPhones did not contain AI features as expected. Some analysts say Apple could still exceed expectations with potential surprises in upcoming earnings reports.
Free Press writer Jamie L. LaReau contributed to this report.
Benzinga is a financial news and data company headquartered in Detroit.
