"Stock markets spiked and then immediately reversed course after the Federal Reserve lowered the federal funds rate by a quarter percentage point to 4% from 4.25% on Wednesday in a move that had been telegraphed for weeks leading up to the meeting. Newly sworn in Federal Reserve Governor Stephen I. Miran voted against the action, in favor of a steeper cut of half a percentage point, the Fed disclosed in its monetary policy update."
"In the options market, there was an initial spike in put activity-trading in put options that give an investor the opportunity to sell stock at a specific price-that likely represented increased hedges as investors look to protect themselves on the downside, said Andrew Hiesinger, founder and CEO of Quant Data. He noted that the cut was expected but investors are looking for signals about whether they can expect two or three more cuts this year and the outlook for 2026."
Federal Reserve lowered the federal funds rate by 25 basis points to 4% from 4.25%, with one dissenting vote favoring a 50-basis-point cut. Stock markets initially rose then reversed: the S&P 500 closed down 0.1%, the Nasdaq closed down 0.33%, the Dow Jones Industrial Average closed up 0.57%, and the Russell 2000 rose 0.26%. Gold briefly jumped to $3,704 an ounce before falling to $3,665. Options markets experienced an initial spike in put activity, interpreted as increased hedging. The Fed signaled some future economic weakness, implying potential additional rate cuts later in the year. Job growth slowed to 22,000 hires and unemployment rose to 4.3%.
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