In a significant move that sent ripples through financial markets, the US benchmark equity indexes closed lower on Wednesday, following the Federal Open Market Committee's decision to reduce the target range for the federal funds rate. The Federal Reserve has decided to ease its policy rate by 50 basis points, bringing it down to a range of 4.75% to 5%.
This adjustment comes alongside the updated Summary of Economic Projections, which indicates that another 50 basis points reduction is anticipated later this year, followed by a further 100 basis points decrease next year. The recent revisions to the Summary of Economic Projections (SEP) indicate a slowdown in GDP and inflation growth for this year, with a consequent increase in the projected end-of-year unemployment rate compared to the previous estimate released in June. In line with these monetary adjustments, the Mortgage Bankers Association reported a striking 14.2% surge in mortgage applications for the week ending September 13, following a modest 1.4% increase in the prior week.
This spike can be attributed to both refinancing activity and new home applications, both of which benefited from a further decline in mortgage rates now nearing a two-year low. In the commodities market, October West Texas Intermediate crude oil experienced a slight decline, settling down by $0.28 at $70.91 per barrel.
Meanwhile, the global benchmark, November Brent crude, saw an increase of $0.08, reaching $73.78, largely influenced by a report reflecting a larger-than-expected decrease in U.S. oil inventories. Turning to the automotive sector, General Motors ($GM) announced that its electric vehicle customers will now be able to utilize Tesla’s ($TSLA) Supercharger network through a specially approved GM adapter.
This strategic move not only enhances the convenience for GM’s electric vehicle owners but also contributed to a 2.3% rise in GM shares. Conversely, shares of Resmed ($RMD) took a hit, falling 5.5% as Wolfe Research downgraded the stock from peer perform to underperform, indicating a more cautious outlook for the company in the near term.
This fluctuation in stock prices among major companies illustrates the market's sensitivity to both fiscal policies and individual company performance as the economic landscape continues to evolve..