US stock indices closed mixed at the end of yesterday's session. The S&P 500 fell by 0.10%, while the Nasdaq 100 declined by 0.43%. The Dow Jones Industrial Average, however, gained 0.57%.
Futures on US and European stock indices are rising, indicating a recovery in confidence following the Federal Reserve's decision to cut interest rates. Although questions regarding the pace of future policy easing remain unresolved. The S&P 500 futures advanced by 0.4%, and the Nasdaq 100 futures climbed by 0.6%, after the underlying indices edged lower post-Fed announcement. Treasury bonds partially recovered their losses, and the dollar strengthened for a second consecutive day. Fed Chair Jerome Powell characterized the rate cut as a risk management exercise.
The Fed's decision caused a mixed reaction in markets. On one hand, the rate cut is viewed as a signal of support for the economy, particularly amid slowing global growth. On the other hand, investors are concerned that further monetary easing could fuel inflation and other undesirable consequences.
After months of intense pressure from the White House to lower borrowing costs, the Fed reduced its benchmark interest rate by a quarter percentage point and projected two additional cuts this year. The Federal Open Market Committee (FOMC) voted 11–1 to lower the target range for the federal funds rate to 4–4.25%.
This week, the global equity index reached a record high as investors priced in a 25-basis-point rate cut ahead of the Fed meeting. Although the central bank proceeded with the cut, officials emphasized that future policy decisions would be meeting-dependent and cautioned that there is no risk-free path. Nevertheless, policymakers now anticipate two additional quarter-point rate cuts this year, one more than projected in June.
During his press conference, Powell pointed to growing signs of labor market softness to explain why officials deemed it appropriate to cut rates after holding them steady since December due to concerns over tariff-driven inflation. Powell also pushed back against bond traders' expectations that the Fed would embark on an aggressive series of rate cuts to prevent a US economic slowdown. The Fed Chair made it clear that he has not abandoned his cautious approach, continuing to weigh inflation risks.
From a technical standpoint, the key objective for the S&P500 buyers today will be to break above the nearest resistance level of $6,630. A successful breach would signal upward momentum and open a path toward testing the $6,638 level. Another priority for bulls will be to establish control above $6,648, which would strengthen their position. In the event of a downward move driven by a decline in risk appetite, buyers must assert themselves near the $6,616 level. A breakdown below this support could quickly push trading back toward $6,603, exposing a move down to $6,590.
