Stocks - Wall Street Dives as Fed's Powell Muddies Waters on Future Cuts

Investing.com - Stocks fell sharply Wednesday after the Federal Reserve cut its key interest rate to support the domestic economy amid slowing global growth, but indicated more cuts are up in the air.

The selloff was due in part to Fed Chairman Jerome Powell confusing investors by first suggesting the cut might be the only cut and then saying there might be more. His first comment cause a huge selloff, sending the Dow Jones industrials down as many as 478 points before buying came in to pull the index back from the brink.

The S&P 500 fell 1.1%, and the Nasdaq Composite dropped off about 1.2%. The Dow was off 1.2%. Only 13 stocks in the Nasdaq 100 showed gains.

Among the strongest stocks of the day was Apple (NASDAQ:AAPL), up 2% after a strong earnings report on Tuesday. It was one of just four Dow stocks in the green on the day, along with JPMorgan Chase (NYSE:JPM), Pfizer (NYSE:PFE) and chemical maker Dow Inc (NYSE:DOW).

The Dow, off 334 points, and S&P 500, down 33 points, suffered their worst one-day point losses since May 31, when the Dow fell 355 points and the S&P fell 37 points. The Nasdaq's loss was its worst one-day loss since June 25.

The S&P 500 was up 1.3% in July. The Nasdaq added 2.1%. The Dow rose 1%.

The selloff was prompted by investors' unhappiness with Fed boss Powell's explanation of why the FOMC cut its federal funds rate to 2% to 2.25% from 2.25% to 2.5%, its first cut in a decade.

In his news conference after the rate cut announcement, Powell struggled to explain the need for a cut when the domestic economy is performing well. He said he was more worried about business investment, global growth and dealing with rising trade tensions. The last was causing many businesses to hold off on investment decisions, he said.

He caused much confusion for many traders first by suggesting the cut was a one-and-done, saying the rate cut was just a "mid-cycle adjustment." Then, he said there might be more cuts. At the end of the conference, he also indicated more hikes were on the table. He wouldn't say how many.

That helped stocks cut their losses.

Investing.com's Fed Rate Monitor Tool gives a 57% chance of another rate cut in September to 1.75% to 2%. There's a 37% chance of a rate cut in December.

Oil prices were higher. West Texas Intermediate crude was up 53 cents to $58.58 a barrel and ended July up 0.2%. {{8833|Brent } crude futures ended up 45 cents to $65.17.

The 10-year Treasury yield fell to 2.013% from 2.061% on Tuesday. It was up 1% for the month.

None of the 11 sectors of the S&P 500 were higher on the day. Energy shares had the smallest loss.

Consumer staples, materials and technology shares were the weakest sectors. Chip stocks were especially weak in response to weak guidance offered Tuesday by Advanced Micro Devices in its earnings report. AMD (NASDAQ:AMD) was down 10%. Dow component Intel (NASDAQ:INTC) fell 2.2%.

Nordstrom (NYSE:JWN) was a big winner on the day after The Wall Street Journal said members of the retailer's founding family are in the early stages of discussing a proposal to boost their roughly one-third stake to over 50%, citing people familiar with the matter.

Winners and Losers Among S&P 500 Stocks

Nordstrom, automotive parts maker Aptiv (NYSE:APTV) and utility Edison International (NYSE:EIX) were among the top S&P 500 stocks.

AMD, Maxim Integrated Products (NASDAQ:MXIM) and Micron Technology (NASDAQ:MU), all in the chip industry, were among the S&P 500 losers.

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