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US markets end mostly in green after Fed cuts rates

19 Sep 2019 Evaluate

The US markets ended volatile session mostly in green on Wednesday after the Federal Reserve revealed its widely expected decision to cut rates by another 25 basis points, lowering the target range for the federal funds rate to 1.75 to 2 percent. The latest rate cut was once again attributed to the implications of global developments for the economic outlook as well as muted inflation pressures. The accompanying statement was largely unchanged from July, with the Fed reiterating that the labor market remains strong and that economic activity has been rising at a moderate rate. The Fed did acknowledge in its latest statement that exports have weakened along with business fixed investment, although the central bank noted household spending has been rising at a strong pace. The central bank reiterated that it will act as appropriate to sustain the economic expansion, with a strong labor market and inflation near its symmetric 2 percent objective.

Fed Chairman Jerome Powell said that the central bank is prepared for a more extensive sequence of rate cuts in the face of an economic downturn but noted that is not currently expected. The Fed announcement largely overshadowed a Commerce Department report showing a substantial rebound in new residential construction in the month of August. US homebuilding surged to more than a 12-year high in August as both single- and multi-family housing construction increased, suggesting that lower mortgage rates were finally providing a boost to the struggling housing market. As per the report, housing starts jumped 12.3% to a seasonally adjusted annual rate of 1.364 million units last month, the highest level since June 2007.

Dow Jones Industrial Average rose 36.28 points or 0.13 percent to 27,147.08 and S&P 500 inched up by 1.03 points or 0.03 percent to 3,006.73, while Nasdaq was down by 8.62 points or 0.11 percent to 8177.39.

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