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Stocks Tank as Fed Signals Pause on Rate Cuts

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Finance News

FED RATE CUT,STOCK MARKET,INFLATION

The Federal Reserve cut interest rates for the third time in a row, but hinted at a pause in further reductions until inflation cools. This sparked a sharp selloff in stocks, especially among smaller companies.

Investors reacted negatively to the Federal Reserve's (Fed) decision to cut interest rates by a quarter percentage point, marking its third consecutive reduction. Although the move was anticipated, Fed Chair Jerome Powell indicated that further rate cuts are likely to be paused as long as inflation remains above the 2 percent target. This sent stocks plummeting, with the S&P 500 Index plunging 3 percent for its worst performance on a Fed Day since March 2020.

Small-cap stocks were particularly hard hit, with the Russell 2000 Index sinking 4.4 percent. Treasury yields surged following the announcement, reflecting a hawkish shift. The Cboe Volatility Index (VIX) soared to 28, its highest level since August's volatility shock

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