Federal Reserve Cuts: Impact on U.S. Stocks and Economy

U.S. stocks dropped on Wednesday after the Federal Reserve cut interest rates by a quarter percentage point. The central bank's economic projections signal a slow pace of cuts next year, causing investor concerns. Major indices like the Dow and Nasdaq experienced declines, yet tech stocks and deregulation hopes fueled earlier gains.

U.S. stocks took a hit on Wednesday, erasing earlier gains, following the Federal Reserve's decision to cut interest rates by a quarter percentage point. The central bank's economic projections suggest a slower pace of rate cuts next year, prompting investor uncertainty.

The Federal Reserve reduced rates by 25 basis points to a range of 4.25%-4.50%. Its summary of economic projections indicated anticipation of a total half percentage point rate cut by 2025's end, given a robust labor market and stalled inflation reduction. Investors closely monitored Fed Chair Jerome Powell's commentary for more insights on future rate measures.

The Dow Jones Industrial Average plummeted 266.21 points, marking its 10th consecutive decline, while the S&P 500 and Nasdaq also fell sharply. Despite recent dips, technology companies have driven year-to-date gains, supported by artificial intelligence enthusiasm and prospective deregulation under President-elect Trump's incoming administration.

(With inputs from agencies.)