- The stock market took an unexpectedly nasty tumble following a routine rate cut amid—critically—broader signals that the Federal Reserve might only cut rates twice in 2025 instead of four more times.
Markets nosedived in response to indications of a more conservative stance than previously expected. The Dow Jones Industrial Average dropped 2.6%, while the Nasdaq composite fell more than 3.5%. The S&P 500 sunk 2.9%. Among the key signals from the Fed include a higher terminal interest rate projection of 3% rather than 2.875%, and an increased inflation forecast of 2.5% next year. Both points suggest the Fed will slow its roll on rate cuts until inflation shows a steady decline.
