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Fed cuts rates by 25 bps, as expected

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Indexes down: Dow 0.25%, S&P 500 0.46%, Nasdaq 0.55%

(Updates with Federal Reserve policy announcement)

By Chuck Mikolajczak

NEW YORK, Dec 18 (Reuters) -

U.S. stocks fell on Wednesday, erasing earlier gains after

the Federal Reserve cut interest rates by a quarter of a

percentage point and the central bank's economic projections

signaled a slower pace of cuts next year.

The Fed

cut rates

by 25 basis points to the 4.25%-4.50% range and its summary

of economic projections (SEP) indicated it will make rate cuts

totaling a half percentage point by the end of 2025 given the

solid labor market and the recent stall in lowering inflation.

Investors were watching comments from Fed Chair Jerome

Powell for more insight on the path of interest rates from the

central bank.

"It looks like some early worries about tariffs could be

creeping into the Fed's projections. They're penciling in fewer

rate cuts in 2025, slightly higher inflation, and a modest

increase in the unemployment rate," said Brian Jacobsen, Chief

Economist at Annex Wealth Management in Menomonee Falls,

Wisconsin.

"The Fed can cut back on the pace of rate cuts thanks to

a strong economy."

The Dow Jones Industrial Average fell 105.67

points, or 0.25%, to 43,342.93, the S&P 500 lost 28.31

points, or 0.46%, to 6,022.71 and the Nasdaq Composite

lost 109.43 points, or 0.55%, to 19,999.63.

U.S. Treasury yields moved higher after the statement as

the benchmark U.S. 10-year note rose 6.3 basis

points to 4.448%.

Higher interest rates are usually seen as a drag to the

equity market, boosting the appeal of less risky assets while

also crimping the ability of companies to grow earnings.