The drop in the Fed rate is expected but the “real surprise” is economic prospects, explains the CEO of

The stock markets, which have been at peaks of all time, increased in response to the decision to reduce the rates of 25 base points, but fell shortly after. The S&P 500 decreased by 0.1%, the NASDAQ decreased by 0.33%and the industrial average of Dow Jones closed up 0.57%. The Russell 2000, which includes shares with smaller capitalization, increased by 0.26%. Gold prices reached $ 3,704 per ounce before going back to $ 3,665.

On the options market, there has been an initial peak in the sales activity – traditional in the sales options which give an investor the possibility of selling shares at a specific price – which probably represents an increase in covers while investors seek to protect themselves during the decline, said Andrew Hiesinger, founder and CEO of Data. He noted that the reduction was expected, but investors are looking for signals to find out if they can expect two or three additional cuts this year and the prospects of 2026.

“The real surprise is the opinion of the Fed on the current state of the economy,” said Hiesinger Fortune. “They report a certain weakness in the future, which means that they are looking to make more cuts.”

This is good news for technological and growth actions, which would generally mean a rally, he added, but the weaknesses of the economy are worrying for investors, especially on the front of jobs. Last month, the United States added 22,000 new hires, which was a precipitated fall in July when 79,000 jobs were added to the payroll. Unemployment has increased to 4.3%, the highest it has been since 2021.

According to Niladri “Neel” Mukherjee, investment director of Tiaa Wealth Management, the Fed “has more weight on the softening of labor market conditions than the risk of inflation linked to the rate by reducing 25 basis points and projecting two additional cuts this year,” he wrote.

“It was a reduction in risk management, the Fed trying to progress towards a neutral from a restrictive policy position, because the risk for the labor market has increased,” Mukherjee said in a press release.

The president of the Fed, Jerome Powell, at her press conference after the announcement, seemed less concerned about the possibility of rising prices in the light of the slowdown in the economic and labor market, he said.

“This established policy is optimistic for obligations, a lowering for the dollar and neutral for short -term actions,” added Mukherjee.

Jake Schurmeier, portfolio director at Harbor Capital and former member of the Markets group of the Federal Bank of the New York reserve, noted the stock market rally with small capitalization and a decision of gold order was logical being logical given the political framework. He said the surprise on Wednesday was not the cup, but the Fed dowry plot showing a median of three sections projected rather than waiting for the 2.5 market. This marginal passage to a more dominant direction shows a significant change in political reflection among the members of the committee.

Schurmeier said that Miran’s dissent was not surprising, but he was potentially expected two additional dissidents, which underlines the marginal nature of the debates on politics and uncertainty among Fed officials on the pace of relaxation. He said that the Fed maintains flexibility in its perspectives and that the data from the Summary of Economic Projections of the Fed (MS) are fluid rather than firm promises.

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