Fed cuts rate for the second time of the year in a widely expected move meant to sustain a decade-long economic expansion but gave mixed signals about what may happen next and announced that it would take down its benchmark overnight lending rate to a target range of 1.75% to 2%.
After the release of the Fed’s monetary policy decision, Fed Chair Jerome Powell said in a press conference the Fed’s “temporary operations were effective in relieving funding pressures, and we expect the federal funds rate to move back into the target range.” and also remarked that turmoil in money markets this week carry “no implications for the economy or the stance of monetary policy."
The major indices DOW, SP500 gained 2.68%, 1.91%, whereas Nasdaq was marginally up by 0.83% in the last month of the third quarter. Investors remained calm about the rising prospects of a global trade war. Fed decision expected to drive the bond market, which will affect on the financial market. The major banks were seen to go down as investors preferred to sell-off and shift to the defensive or non-cyclical stocks as they tend to perform in the times of uncertainties. The jobs report generally have a heavy impact on the FED policymakers who then decides to ease or tighten up financial conditions. The unemployment rate stayed at 3.7% but failed to meet the Wall Street estimates of 150,000 jobs and reported 130,000 jobs. The wages increased by 0.4% and gained 3.2% yearly. With the previous June and July reports revised lower as well, monthly job growth in the U.S. has slowed to just 158,000, compared with 223,000 per month a year ago.
The Utilities sector, the Financial sector, and Energy sector were up by 4.62%, 6.54%, and 5.95% respectively on a monthly basis and 22.22%, 17.71%, and 3.86% on a YTD basis. The top-performing stocks were Signet Jewellers and Marathon Petroleum up by 42.73% and 26.84% on an MTD basis and Western Digital, Target Corporation, and KLA-Tencor Corp up by 27.21%, 22.53%, and 34.08% respectively.
Among the tech-heavy Nasdaq sector Dollar Tree, Lam Research leads the monthly top performer's list gaining 12.58% and 9.30% respectively. Google, Vodafone, and Seagate top the quarterly best-performing list up by 12.22%, 21.43%, and 14.19% respectively.
As we move ahead to the last quarter of the year, investors are expecting a good Job Report which is expected to be released on the first Friday. Another positive earnings season will help Wall Street make an even better comeback.