On September 18, the U.S. Federal Reserve decided to cut the interest rates by 0.25%. This was a complicated process as some of the policymakers disagreed with this decision.
There are various reasons why the decision proved controversial. Unemployment is very low. The unemployment level is at the lowest point in 50 years. It means that the number of people looking for a job which is good news for the local economy. The U.S. economy is growing for more than ten years after the great recession. The U.S. consumers spend a lot of money which supports the economy.
However, the trade war between the U.S. and China had a negative impact on the economy. The dispute between the two biggest economies in the world is a severe risk to the stock markets.
In this situation, the rate-setting committee decided that it was time to lower the interest rates. As mentioned above. For instance, the Boston Fed President Eric Rosengren and Kansas City Fed President Esther George. They voiced their opposition to this decision.
U.S. stocks reacted to this news on Thursday. The Dow Jones Industrial Average fell by 95 points to 27,242. The S&P 500 increased by 13 points to 3,020. Another U.S. index which is the NASDAQ composite, rose by 53 points to 8,230.
The shares of tech giants such as Microsoft, Alphabet, and others increased on Thursday. For instance, the shares of Alphabet increased by 0.3%. Meanwhile, the shares social media giant Facebook also increased by 0.3%.
The trade talks between the U.S. and Chinese Representatives will meet in October. This meeting will take place in Washington, D.C. The result of this meeting will affect stock markets in the U.S. and around the world. The decision to lower the interest rates had a positive impact on the U.S. stock indexes.