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Federal Reserve cuts interest rates by 25 basis points

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Fed projections show two more cuts for 2025

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Powell remarks on weak labor market

(updates at the close)

By Abigail Summerville and Purvi Agarwal

Sept 17 (Reuters) -

The Nasdaq and the S&P 500 closed lower in choppy trading on

Wednesday, after the U.S. Federal Reserve cut interest rates by

an expected 25 basis points and Fed Chair Jerome Powell cited

the weak job market.

The Dow closed higher after meandering during Powell's

speech.

The central bank indicated it will steadily cut rates for

the rest of the year as policymakers signaled concerns about

weakness in the labor market. The Fed projected two more

quarter-percentage-point cuts this year.

In a press conference, Powell talked about the rising

downside risks of employment compared to inflation, but said

inflation risks still need to be assessed and managed.

This rate cut was already priced in by investors,

according to data compiled by LSEG.

"Powell tempered some of the initial enthusiasm in the

markets for a more aggressive path of monetary easing. He noted

the softness in the labor market, but reserves a larger cut for

more serious conditions that are not present today," said

Michael Rosen, chief investment officer at Angeles Investments.

"The Fed also raised its inflation forecast,

highlighting the delicate balance between setting monetary

policy to offset a weaker labor market versus bringing inflation

lower," he said.

According to preliminary data, the S&P 500 lost 6.63

points, or 0.10%, to end at 6,600.13 points, while the Nasdaq

Composite lost 73.10 points, or 0.33%, to 22,260.85. The

Dow Jones Industrial Average rose 262.26 points, or

0.56%, to 46,012.75.

The Fed's decision and outlook will test Wall Street's

recent rally, which has been supported by rate-cut expectations

and revived enthusiasm around AI-stock-linked trading.

Powell fielded several questions about the Fed's

independence from the executive branch.

On Tuesday, White House economic adviser Stephen Miran

was sworn in as a Fed Governor and an appeals court rejected

U.S. President Donald Trump's attempt to sack Governor Lisa

Cook.

Meanwhile, Nvidia ( NVDA ) weighed on the Nasdaq. Shares

fell after a report said China's internet regulator had

instructed the country's biggest tech companies

to stop

buying all of the AI leader's chips.

Workday jumped after a

report

that activist investor Elliott Management took a more than

$2 billion stake in the human resources software provider.

Lyft ( LYFT ) popped on the news that Alphabet's

Waymo would launch autonomous cab rides in Nashville

next year in

collaboration

with the ride-hailing firm. Shares in rival Uber ( UBER )

fell.