US Market ends at record high after Federal Reserve cuts rates

The US stock market ended at record high after swinging between gains and losses on Wednesday, 30 October 2019, on the back of the policy statement by the U.S. Federal Reserve that cut interest rates by a quarter of a percentage point. However, market gains capped as the APEC summit in Chile was canceled, removing hopes for Trump to sign a trade deal there with Xi Jinping. At closing bell, the Dow Jones Industrial Average advanced 115.29 points, or 0.43%, to 27,186.69 and the Nasdaq Composite added 27.13 points, or 0.33%, to 8,303.98, meanwhile the S&P 500 gained 9.88 points, or 0.33%, to 3,046.77.

The Fed announced its widely expected decision to lower the target range for the federal funds rate by 25 basis points to 1.5% and 1.75%,but dropped a previous reference in its statement to "act as appropriate" to support the economic expansion, which could signal the Fed may hold off on future rate cuts. The quarter point rate cut follows two matching moves at the Fed's meetings in September and July, which marked the first rate cuts in over a decade. In his post-meeting press conference, Fed Chairman Jerome Powell said the current stance of monetary policy is "likely to remain appropriate" as long as "the outlook remains broadly in keeping with our expectations." Powell also told reporters the Fed would need to see a "really significant move up in inflation that's persistent" before the central bank would consider raising interest rates.

On the trade war front, Chilean President Sebastian Pinera was canceling the APEC summit next month, removing hopes for Donald Trump meeting with Chinese President Xi Jinping, where a phase one trade deal might be signed.

The interest-rate sensitive banking sub-sector pared losses after the statement, but was still down 0.7%. Utilities, up 0.4%, was the best performing while the energy sector lagged, down 2.1%.

Investors also dealt with the latest round of corporate earnings. Shares of General Electric Co jumped 9.20% after the industrial conglomerate beat quarterly profit estimates and raised its cash forecast for the year.

ECONOMIC NEWS: US GDP rises 1.9% in the third quarter - The Commerce Department said Wednesday that gross domestic product - the broadest measure of the U.S. economy - grew at an annualized rate of 1.9% in the third quarter ended September 2019, decelerating slightly from the 2% pace in the second quarter, owing to a decline in business investment and smaller increases in consumer and government spending. Consumer spending, the main engine of growth, rose a healthy 2.9%, but it was down from 4.6% in the spring. Businesses investment in structures sank 15% and spending on equipment dropped nearly 4%. Government spending also increased by a smaller 2% compared to 4.8% in the second quarter.

U.S. private payrolls increased by 125,000 in October, according to ADP and Moody's Analytics. However, September payrolls were trimmed down by 42,000 to 93,000.

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