Wall Street got the big rate cut it wanted, but markets failed to sustain a rally. The Federal Reserve on Wednesday cut its key overnight lending rate by a half percentage point . It's a surprising departure from the first cuts of previous easing cycles from the central bank, as well as a break from consensus expectations from as recently as last week before markets started pricing in a bigger cut.
But stocks struggled to advance after the decision, after initially popping on the decision, as investors worried the bigger cut signaled greater economic weakness ahead, even with inflation well on its way to the central bank's 2% target. .SPX 1D mountain S & P 500 Many market observers were disappointed by the move, saying the Fed was too aggressive — and possibly too backward-looking — with its initial cut.
Ryan Sweet, chief U.S. economist at Oxford Economics, noted that the half-point cut suggests slowing growth is increasingly concerning Fed policy makers.
"The initial phase of the Federal Reserve's normalization cycle is a little more aggressive than we anticipated as the central bank quickly shifted more of its attention away from inflation and toward the labor market," said Sweet in a note. "Though the Fed won't publicly acknowledge it, its dual mandate is turning into a singular one as the job market has softened." "In our view, the rise in the unemployment rate largely reflects hiring that insufficiently absorbing strong gains in the labor supply, primarily driven by .