The Dow Jones Industrial Average surged 465 points Wednesday after the Federal Reserve lowered interest rates for the first time this year and outlined its policy path for the remainder of 2025.
The S&P 500 inched up 0.1%, while the Nasdaq Composite slipped 0.2%. The Dow Jones Industrial Average outpaced both, jumping by 1%.
In a widely anticipated move, the Federal Open Market Committee voted 11–1 to reduce its benchmark federal funds rate by a quarter percentage point, setting a new target range of 4% to 4.25%. Policymakers also projected two additional cuts before year-end.
Investors took note of the Fed’s acknowledgment of cooling labor market conditions, a sign that officials may now be weighing employment risks more heavily against inflation concerns. The decision also came with fewer dissenting votes than analysts had forecast, suggesting stronger consensus among central bankers.
Meanwhile, Nvidia fell 2.3% after a report said China's internet regulator had instructed the country's biggest tech companies to stop buying all of the AI leader's chips.
The stock weighed on the S&P 500 technology sector , which was down 0.7%, and dragged on the tech-heavy Nasdaq.
A rise in financial stocks such as American Express and Goldman Sachs boosted the Dow.
A 1.6% decline in Tesla weighed on the consumer discretionary sector, which fell 0.6%.
The Fed meeting will be a test of Wall Street's recent rally, supported by rate-cut expectations and revived enthusiasm around AI-stock-linked trading. Investors say the resumption of Fed rate cuts could add to the rally.
Concerns about the central bank's independence seem to have eased slightly, with economic adviser Stephen Miran sworn in as a Fed Governor on Tuesday and an appeals court rejecting U.S. President Donald Trump's bid to sack Governor Lisa Cook.
The three main indexes have gained so far in September, a month deemed historically bad for U.S. equities. The benchmark S&P 500 has shed 1.5% on average in the month since 2000, data compiled by LSEG showed.
In other stocks, New Fortress Energy soared 31.7% after the company reached an agreement to supply liquefied natural gas to the Puerto Rican government.
Workday gained 9%, to top the benchmark index after activist investor Elliott Management said on Tuesday it had built a stake of more than $2 billion in the human resources software provider.
Lyft jumped 14% on the news that Alphabet's Waymo would launch autonomous cab rides in Nashville next year in collaboration with the ride-hailing firm.
Shares in rival Uber fell 4.4%, landing at the bottom of the S&P 500.
Advancing issues outnumbered decliners by a 3.09-to-1 ratio on the NYSE and by a 1.83-to-1 ratio on the Nasdaq.
The S&P 500 posted 12 new 52-week highs and no new lows, while the Nasdaq Composite recorded 56 new highs and 18 new lows.
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