U.S. stocks saw big swings Wednesday as investors toggled between the Federal Reserve’s looming interest rate cut and the race for the White House following the high-stakes debate between Vice President Kamala Harris and former President Trump. The Dow Jones Industrial Average recovered a good portion of its 600-plus point drop by mid-afternoon, as did the broader S&P 500, while the Nasdaq Composite turned positive, rising over 1%.
Traders dialed back expectations for a 50 basis point rate cut by the Federal Reserve next week to a mere 13%, while the odds of a 25 basis point cut stand at 87%, as tracked by the CME’s FedWatch Tool, which measures the probabilities of rate moves. Policymakers are expected to cut interest rates on Sept. 18 for the first time since March 2020. Big money center banks, which profit from higher interest rates, were mixed, including JPMorgan, Bank of America and Wells Fargo.