US Fed Meeting Live Highlights: Fed announces 50-bps historic rate cut; US economy in good place, says Powell

The Federal Reserve has cut its benchmark interest rate from its 23-year high, with consequences for debt, savings, auto loans, mortgages and other forms of borrowing by consumers and businesses.

On Wednesday, the Fed announced that it reduced its key rate by an unusually large half-percentage point, to between 4.75 and 5 percent, the first rate cut in more than four years.

The central bank is acting because, after imposing 11 rate hikes dating back to March 2022, it feels confident that inflation is finally mild enough that it can begin to ease the cost of borrowing. At the same time, the Fed has grown more concerned about the health of the job market. Lower rates would help support the pace of hiring and keep unemployment down.

“Recent indicators suggest that economic activity has continued to expand at a solid pace," the Fed said in a statement. “Job gains have slowed, and the unemployment rate has moved up but remains low. Inflation has made further progress."

More Fed rate cuts are expected in the coming months, with the steepness of the reductions dependent on the direction of inflation and job growth.

Stocks fell as Jerome Powell said the Federal Reserve is not in a rush to ease policy after cutting rates by a half-point.

The S&P 500 wiped out a gain of as much as 1% as the Fed chief cautioned against assuming big rate cuts would continue. Treasury 10-year yields advanced seven basis points to 3.71%. The dollar rose.

The S&P 500 fell 0.3%. The Nasdaq 100 dropped 0.5%. The Dow Jones Industrial Average lost 0.2%. A gauge of the “Magnificent Seven” megacaps slid 0.1%. The Russell 2000 of small firms was little changed.

The dollar dropped after the Federal Reserve on Wednesday cut interest rates by half a percentage point, citing greater confidence that inflation will continue to recede to the U.S. central bank's 2% annual target.

The Fed cut the overnight rate to the 4.75%-5.00% range and policymakers see the Fed's benchmark rate falling by another half of a percentage point by the end of this year, another full percentage point in 2025, and by a final half of a percentage point in 2026 to end in a 2.75%-3.00% range.

The dollar index was last down 0.53% on the day at 100.37, the lowest since July 2023. The euro gained 0.55% to $1.117575. The greenback weakened 1.07% to 140.825 Japanese yen.

"It's a more dovish cut. It certainly wasn't a hawkish cut," said Vassili Serebriakov, FX & macro strategist at UBS in New York.

Traders ramped up their bets on the pace of future interest rate cuts from the Federal Reserve after the US central bank reduced its benchmark by half a point.

The market now shows about 70 basis points worth of combined cuts over the remaining two policy meetings this year. The Fed’s projections — known as the dot plot — show a narrow majority favor lowering rates by at least an additional half-point in 2024.

That indicates traders are once again ahead of the Fed in pushing for lower borrowing costs, even after policymakers kicked off their easing cycle with a larger-than-forecast move.

They held on to their boosted bets on easing even after Chair Jerome Powell made clear that Wednesday’s decision wasn’t indicative of the pace ahead for cuts. Those comments were enough to push Treasury yields higher across the curve, leaving the monetary policy-sensitive two-year yield little changed after an earlier slide.

Oil prices slipped lower on Wednesday as a rate cut announcement from the Federal Reserve raised worries about the health of the U.S. economy, while investors largely shrugged off a crude oil inventory decline that they attributed to the impact of short-lived weather.

Brent crude futures for November settled at $73.65 a barrel, losing 5 cents, while WTI crude futures for October settled at $70.91 a barrel, falling 28 cents.

Stocks fluctuated as Jerome Powell said the Federal Reserve is not in a rush to ease after cutting rates by a half-point.

The S&P 500 swung between gains and losses after hitting an all-time high in the immediate aftermath of the Fed decision. Powell cautioned against assuming the half-point move set a pace that policymakers would continue. Treasury two-year yields were little changed at 3.6%. The dollar retreated.

The S&P 500 rose 0.3%. The Nasdaq 100 rose 0.1%. The Dow Jones Industrial Average rose 0.2%.

Bitcoin edged higher after the Federal Reserve reduced borrowing rates for the first time since the Covid pandemic paralyzed the economy more than four years ago and helped cryptocurrencies break into the mainstream.

The US central bank lowered its benchmark interest rate by a half percentage point. Projections released following their two-day meeting showed a narrow majority, 10 of 19 officials, favored lowering rates by at least an additional half-point over their two remaining 2024 meetings.

The original digital asset gained about 1.4% to $60,989, while smaller tokens were mixed. Lower rates usually help to spur an increase in demand for riskier assets.

Credit derivative spreads narrowed on Wednesday after the Federal Reserve cut interest rates for the first time in over four years, lowering them by a half percentage point.

Here are comments on the central bank’s move from credit market participants:

Bob Michele, Chief Investment Officer and Head of Global Fixed Income at JPMorgan Asset Management:

“Credit spreads will tell us whether investors believe the economy is in dire shape — and this was an emergency 50 basis-point cut — or whether this is just a Fed, a long way from neutral, perhaps a meeting or two away from where they should have started the cycle, so they are starting to get towards neutral. All is well,” Michele said on Bloomberg TV.

“We’re telling clients ‘just get into the bond market,’ just get into a general bond fund.

“Yields are coming down. Yields are at this level with $6.3 trillion in cash building up and most people not liking the bond market. Some buying has brought it down here and this money will come in because they’re going to watch the return on cash go down like power windows.”

Hunter Hayes, chief investment officer at Intrepid Capital Management and a co-lead portfolio manager of the Intrepid Income Fund:

“We think this rate drop is very supportive for high yield and could provide a sanguine backdrop for refinancings later this year and into 2025. People tend to fixate on yield to worst in high yield. But the yield to call on a lot of these bonds is a lot more attractive than the yield to worst implies, assuming the refinancing window becomes very active. Although it’s still highly uncertain what will happen, we see a scenario where a lot of companies proactively address their maturity walls in the next 18 months and high yield as an asset class then has a handsome total return profile. This scenario seems more likely against the backdrop of these more aggressive rate cuts.”

Major stock indexes rose and the dollar dropped on Wednesday as traders digested a chunky interest rate cut from the Federal Reserve, which moved to lower borrowing costs in the world's largest economy for the first time in more than four years.

The U.S. central bank cut the overnight rate by half a percentage point, more than the usual quarter-point adjustment, citing greater confidence that inflation will keep receding to its 2% annual target.

The overnight rate, which guides how much interest banks pay each other and affects rates for consumers, is now 4.75%-5.00%.

The blue-chip Dow Jones Industrial Average rose 0.36%, to 41,755.91, the benchmark S&P 500 rose 0.47%, to 5,661.29 and the Nasdaq Composite rose 0.77%, to 17,764.34.

"The Fed ended the pause with a bang. It's a strong signal that they cut by 50 bps and expect another 50 basis points of cuts this year," said Brian Jacobsen, chief economist at Annex Wealth Management in Menomonee Falls, Wisconsin.

Rates had been parked at their highest levels in over two decades since July 2023.

MSCI's index of world stocks rose to a record high and was last quoted up 0.37% at 831.78.

The dollar index, which measures the greenback against a basket of currencies including the yen and the euro, fell 0.54% to 100.36.

Gold prices rose to an all-time high on Wednesday after the U.S. Federal Reserve cut interest rates by 50 basis points, sending the dollar lower.

Spot gold was up 0.9% at $2,592.39 per ounce as of 02:17 p.m. ET (1817 GMT). U.S. gold futures settled 0.2% higher at $2,598.60.

"Gold surges to all-time highs but bond yields have also jumped higher. A 50 bps is good for gold," said Tai Wong, a New York-based independent metals trader.

"Gold is in a bull market; it is likely to move higher. The velocity of that move will depend on Powell's tone."

Inflation is now much closer to our objective, says Powell Ensuring that inflation expectations remain well anchored our patient approach over the past year has paid dividends inflation is now much closer to our objective and we have gained greater confidence that inflation is moving sustainably toward 2% as inflation has declined, Fed Chair Jerome Powell said

Labor market has cooled the upside risks to inflation have diminished and the downside risks to employment have increased as we now see the risks to achieving our employment and inflation goals as roughly in balance and we are attentive to the risks to both sides of our dual mandate in light of the progress on inflation and the balance of risks and today's meeting.

The committee decided to lower the target range for the federal funds rate by 1/2 percentage point to four 4 3/4% to 5% this recalibration of our policy stance will help maintain the strength of the economy and the labor market and will continue to enable further progress on inflation as we begin the process of moving toward a more neutral stance

- Statement adds language to say the committee is “strongly committed to supporting maximum employment” in addition to returning inflation to its 2% goal

- Statement says that “in considering additional adjustments” to rates, officials will assess incoming data, evolving outlook and balance of risks

Here are preliminary key takeaways from the Federal Reserve’s interest-rate decision on Wednesday:

- Fed tweaks language to note job gains “have slowed;” says inflation “has made further progress toward the committee’s 2% objective but remains somewhat elevated”

- Statement says committee has gained greater confidence that inflation is moving sustainably toward 2% goal

- Statement notes that risks to achieving employment and inflation goals “are roughly in balance”

Here are preliminary key takeaways from the Federal Reserve’s interest-rate decision on Wednesday:

- “Dot plot” of rate projections shows the median official expected to lower rates by a percentage point by year-end, implying two more quarter-point cuts or one larger, half-point cut; nine of 19 officials penciled in 75 basis points of cuts or less

- Median rate forecast for 2025 falls to 3.4% from 4.1% in June, implying four additional quarter- point moves next year

Here are preliminary key takeaways from the Federal Reserve’s interest-rate decision on Wednesday:

- Federal Open Market Committee votes 11 to 1 to lower benchmark rate by 50 basis points to target range of 4.75%-5.0%, the first rate cut in more than four years

- Fed Governor Michelle Bowman votes against decision in favor of a smaller, quarter-point cut, the first such dissent since June 2022 and the first time a Fed governor has dissented since September 2005

Markets in India will start expecting a rate action from RBI following the aggressive start by Fed so rate sensitive stocks will be in focus

U.S. central bankers think they’ll need to lower interest rates to a range of 4.25%-4.50% by year-end, more than they anticipated in June, as inflation approaches their 2% goal and unemployment rises.

That's according to the median of new economic projections published on Wednesday by the Federal Reserve at the end of its Sept. 17-18 meeting, at which it delivered part of that expected 100 basis-point reduction this year in the form of an initial half-of-a-percentage-point cut.

The Fed's target range for its short-term borrowing benchmark is now 4.75%-5.00%, and the projections imply policymakers expect quarter-point rate cuts at each of the last two meetings this year, in November and December.

By the end of 2025, policymakers anticipate a policy rate of 3.4%, according to the median of their projections, implying an additional four quarter-of-a-percentage-point cuts next year. The policy rate was seen at 2.9% at the end of both 2026 and 2027, reflecting an arrival to what the median Fed policymaker now sees as a neutral rate.

Stocks wavered amid uncertainties on how aggressive the Federal Reserve will be with rate cuts after holding them at a two-decade high for more than a year.

The S&P 500 was little changed after briefly crossing its all-time closing high earlier this week. Treasury yields rose across the curve. Traders are fully pricing in a 25 basis-point Fed reduction Wednesday, with the chance of a bigger move viewed as a coin-flip.

Fresh quarterly projections released at the conclusion of the central bank’s two-day policy meeting will offer further insight into the path ahead for borrowing costs and the economy. The decision will be announced via a post-meeting statement at 2 p.m. in Washington. Jerome Powell will hold a press conference 30 minutes later.

The Nasdaq 100, the Dow Jones Industrial Average and the Russell 2000 were little changed. Treasury 10-year yields rose three basis points to 3.68%. The dollar was flat.

Tom Essaye at The Sevens Report:

Bottom line, whether the Fed delivers a 25 bp or 50 bp rate cut today is less important than the guidance provided on future cuts as the market wants to see the framework laid out for a fairly aggressive rate cutting path in the months ahead to shore up soft-landing hopes.

So projections and Powell’s speech will be critical for the market reaction late in the session.

Chris Senyek at Wolfe Research:

As financial conditions ease in anticipation of the Fed’s cutting cycle and economic growth begins to pick up, our sense is that small companies and equal-weighted indices should outperform their larger, cap-weighted peers heading into the end of the year.

Mark Cabana and Meghan Swiber at Bank of America:

The Fed’s tossup decision today could lead to a significant rate repricing depending on the size of the rate cut and the communication.

A possibly new Fed trough - or terminal rate - could reflect revised market thoughts around where the Fed will stop versus neutral, which is a function of downside growth risks.

If the Fed delivers a 25bp rate cut — but leaves the trough unchanged — the curve would mechanically bear flatten — but the 10-year Treasury would not be expected to move much. In contrast, if the Fed cuts 50 and shifts the terminal rate lower, there is meaningful bull steepening capacity. Our view: the Fed is unlikely to deliver a hawkish cut which should be supportive for duration and curve steepening.

With inflation barely above their target level, Fed officials have been shifting their focus toward supporting a weakening job market and achieving a rare “soft landing,” whereby it curbs inflation without causing a sharp recession. A half-point rate cut would signal that the Fed is as determined to sustain healthy economic growth as it is to conquer high inflation. This week's move is expected to be only the first in a series of Fed rate cuts that will extend into 2025.

Gold prices edged higher on Wednesday as investors are widely expecting the U.S. Federal Reserve to deliver its first interest rate cut in more than four years later in the day.

Spot gold rose 0.1% to $2,570.79 per ounce as of 12:20 p.m. ET (1620 GMT), hovering below a record high of $2,589.59 hit on Monday. U.S. gold futures were up 0.2% to $2,597.80.

High interest rates and elevated prices for everything from groceries to gas to rent have fanned widespread public disillusionment with the economy and provided a line of attack for former President Donald Trump's campaign. Vice President Kamala Harris, in turn, has charged that Trump's promise to slap tariffs on all imports would raise prices for consumers much further.

Over time, Fed rate cuts should lower borrowing costs for mortgages, auto loans and credit cards, as well as for business loans. Business spending could grow, and so could stock prices. Companies and consumers could refinance loans into lower-rate debt.

The Federal Reserve is widely expected to lower interest rates today after holding borrowing costs at a two-decade high for more than a year.

By how much, however, remains an open question.

Forecasters largely anticipate the Federal Open Market Committee will reduce rates by a quarter point to a range of 5% to 5.25%, though economists at JPMorgan Chase & Co. expect a bigger, half-point move. Investors see better-than-even odds of a half-point adjustment.

Oil prices fell on Wednesday as the market cautiously awaited a rate cut announcement from the Federal Reserve, while investors digested a mixed crude and fuel storage report out of the United States.

Brent crude futures for November lost 55 cents, or 0.8%, at $73.15 a barrel at 11:58 a.m. EDT (1558 GMT). U.S. crude futures for October shed 53 cents, or 0.7%, to $70.66.

Crude inventories fell by 1.6 million barrels to 417.5 million barrels in the week ending Sept. 13, the Energy Information Administration (EIA) said, compared with analysts' expectations in a Reuters poll for a 500,000-barrel draw.

Asia’s central banks are in for some relief after more than two years of currency pain, as the Federal Reserve is set to lower interest rates by at least a quarter-point. The path for the region’s own monetary policy, though, will be bumpy from here.

Officials in Jakarta raced ahead with a quarter-point cut on Wednesday, and lower rates in the US will free up space for rate setters from Seoul to Mumbai to move too. The prospect for the Fed kicking off a regional cutting cycle has attracted investors, who’ve poured money into emerging Asian debt and equities, helping strengthen currencies in the region.

While regional central banks were forced to maintain a tight stance for months for fear of putting pressure on their currencies, the focus now shifts to how much and how quickly they’ll cut, or in some cases whether they ease policy at all. Places such as India and the Philippines face inflationary risks, while South Korea may prioritize financial stability.

Wall Street's main stock indexes were broadly flat in early trade on Wednesday and the dollar weakened as traders weighed up the odds that the Federal Reserve's expected decision to cut interest rates for the first time in more than four years later in the day delivers a supersized move.

Financial markets are fully pricing in a quarter-percentage point rate cut, while the odds of a more unusual half-point cut stood at 63% by Wednesday, according to LSEG data, up from as little as 14% a week ago.

"Given the uncertainty that's still looming, we can expect a decent market reaction whatever the decision is," a Deutsche Bank analyst said in a note.

"You'd have to go back over 15 years to find such an uncertain situation this close to the decision. A lot of money will be made and lost today," they added.

The Dow Jones Industrial Average fell 0.16%, to 41,537.83, the S&P 500 0.03%, to 5,633.04 and the Nasdaq Composite ticked up 0.07%, to 17,638.87.

MSCI's index of world stocks fell 0.82 points, or 0.10%, to 827.88 after having touched a two-week high a day earlier, just below an all-time high.

The U.S. currency edged lower, handing back some of the gains it made on Tuesday, when unexpectedly robust U.S. retail sales data was interpreted as weakening the case for aggressive Fed easing.

The dollar index, which measures the greenback against a basket of currencies including the yen and the euro fell 0.13% to 100.78.

The price increments at which thousands of stocks and ETFs are quoted look set for an overhaul Wednesday, when the US Securities and Exchange Commission votes on final rules to reduce them to less than 1 cent.

That might help trading venues such as the New York Stock Exchange and Nasdaq Inc., among others, to better compete with wholesalers that can quote in finer increments outside of an exchange.

The changes could apply to about 2,400 securities, including stocks and exchange-traded funds, SEC officials said Tuesday during a press briefing. The number of so-called tick-constrained stocks affected by the new increments might change over time. Tick-constrained stocks include those with bid-offer spreads of less than a cent.

Heavyweight growth stocks such as Apple climbed 1% and Alphabet added 0.41%, while Microsoft slipped 0.57%.

Intuitive Machines jumped 52% after clinching a $4.8 billion navigation services contract from NASA.

U.S. Steel rose 1.7% after sources said the U.S. national security panel reviewing Nippon Steel's bid for the U.S.-based steel maker let the companies refile their application for approval of the deal.

The US dollar edged lower against major currencies on Wednesday, giving up some of its overnight gains, as traders braced for the Federal Reserve's much-anticipated decision to cut interest rates.

Against the Japanese yen, the dollar weakened 0.46% to 141.75 after reaching as high as 142.405 in Asia hours. The Bank of Japan will decide on interest rates on Friday.

The euro strengthened 0.20% against the greenback to $1.11380. The dollar was also down 0.4% against the Swiss franc to 0.844.

The dollar index, which measures the greenback against a basket of currencies including the yen and the euro, fell 0.18% to 100.73.

China's markets resumed trade on Wednesday after the mid-autumn festival break, with the yuan down 0.4% at 7.0824 per dollar in offshore trading.

Sterling, the best performing G10 currency of the year, gained at $1.32540, with its rally being driven by signs of a steadying UK economy and sticky inflation.

Gold prices gained on Wednesday, as investors awaited for the Federal Reserve to start its U.S. monetary easing cycle for the first time in over four years.

Spot gold rose 0.3% to $2,577.75 per ounce as of 9:30 a.m. ET (1330 GMT), hovering below a record high of $2,589.59 hit on Monday. U.S. gold futures were up 0.5% to $2,604.30.

Carlyle Group Inc. boss Harvey Schwartz expects the Federal Reserve to lower interest rates three times before the end of this year, then take a pause as it assesses the impact.

The private equity firm still sees signs of a “vibrant economy,” Schwartz, who took over as chief executive officer at Carlyle last year, said in a CNBC interview Wednesday. Monetary policy has worked to cool inflation, and after the expected cuts in 2024, the central bank may only need one additional reduction next year, he said.

“The Federal Reserve has done an amazing job in complex circumstances,” Schwartz said.

Carlyle chief executive officer Harvey Schwartz told CNBC that he expects the US Federal Reserve to undertake three to four rates cuts over the next year. This is based on the economic data that he is seeing, the Schwartz told the channel. He also added that he doesn't think there will be significant cuts this time.

On Tuesday at the Georgetown Psaros Center for Financial Markets and Policy’s annual Financial Markets Quality conference, JPMorgan Chase & Co. chief executive officer Jamie Dimon said again that geopolitical issues — including wars in Ukraine and the Middle East as well as the US’s relationship with China — are his top concern. It “dwarfs any one I’ve had since I’ve been working,” he said.

“People overly focus on, ‘are we going to have a soft landing, a hard landing?’” Dimon said. “Honestly, most of us have been through all that stuff, it doesn’t matter as much.”

Wall Street's main indexes opened slightly higher on Wednesday, as the Federal Reserve was widely expected to deliver its first interest rate cut in more than four years, with most investors betting on a 50-basis point reduction.

The Dow Jones Industrial Average rose 22.7 points, or 0.05%, at the open to 41,628.91. The S&P 500 rose 7.1 points, or 0.13%, at the open to 5,641.68​, while the Nasdaq Composite (.IXIC) rose 35.3 points, or 0.20%, to 17,663.383 at the opening bell.

Vanguard, one of the world’s biggest asset managers, is buying the dollar this week on the view that market bets on Federal Reserve interest-rate cuts are overdone.e

The firm, which has $1.7 trillion in actively managed funds, closed a short position on the greenback that it opened in July because it expects the Fed’s easing cycle to be less aggressive than markets are pricing. That’s regardless of whether policymakers reduce rates by a quarter or a half point later on Wednesday, according to Ales Koutny, head of international rates at Vanguard.

“We’ve seen significant short positions built up on the dollar, but the data in the US remains robust,” Koutny said. “Unless data deteriorates significantly from here, we believe the Fed will deliver fewer cuts than what the market expects.”

The bond market has priced in too many Federal Reserve interest-rate cuts, says Daniel Ivascyn, who runs the world’s largest actively managed fixed-income fund at Pacific Investment Management Co.

Traders anticipate a total of 113 basis points of Fed easing this year, swaps rates showed on Wednesday. That suggests a half-point reduction at one of the three remaining meetings in 2024, starting with Wednesday’s decision. Across the next 12 months, the market sees more than 240 basis points of total cuts, a pace that has been rare outside recessions.

“We do think that the markets may be getting a little bit ahead of themselves in terms of near-term cuts,” Ivascyn, who manages the $163 billion Pimco Income Fund, said on the Odd Lots podcast with Bloomberg’s Tracy Alloway and Joe Weisenthal. “Over the course of the next few months there are some risks of reaccelerating inflation, which may lead to less cuts than are priced into the market.”

Stocks wavered amid uncertainties on how aggressive the Federal Reserve will be with rate cuts after holding them at a two-decade high for more than a year.

The S&P 500 was little changed after briefly crossing its all-time high earlier this week. Treasury yields rose across the curve. Traders are fully pricing in a 25 basis-point Fed reduction Wednesday, with the chance of a bigger move viewed as a coin-flip.

Fresh quarterly projections released at the conclusion of the central bank’s two-day policy meeting will offer further insight into the path ahead for borrowing costs and the economy. The decision will be announced via a post-meeting statement at 2 p.m. in Washington. Jerome Powell will hold a press conference 30 minutes later.

The S&P 500 was little changed. The Nasdaq 100 rose 0.2%. The Dow Jones Industrial Average fell 0.1%. The Russell 2000 Index rose 0.1%.

Shashank Pal - chief business officer, PL Wealth Management, on US Fed outcome:

The world's largest economy is expected to cut rates for the first time in four and a half years amidst fears of an oncoming recession. The US retail sales rose by 0.1% in August, defying expectations of a 0.2% decline. This is as the inflation has moved close to its target of 2%.

This rate cut by Fed will bring down the borrowing costs of US companies and also push central banks across the world to relook at their own monetary policy this week. The debate is still out in the open, though tilted in favor of a 50 bps cut, with almost a 67% probability. A 50 bps cut may cause a short-term spurt in our domestic stock prices only to realign after possibly four to six weeks. Let's keep our fingers crossed on this as our own Central Bank too is going to watch this event very closely and take clues

US mortgage rates declined last week to the lowest level since September 2022 in anticipation of Federal Reserve interest-rate cuts, stoking an influx of applications for home purchases and refinancing.

The contract rate on a 30-year fixed mortgage dropped 14 basis points to 6.15% in the week ended Sept. 13, Mortgage Bankers Association data showed Wednesday. The rate has fallen seven straight weeks, the longest such stretch since 2018-2019.

The average contract rate on a 15-year mortgage slid 29 basis points to 5.42%, also the lowest in two years. Adjustable-rate mortgages dropped to 5.66%.

In its previous FOMC meeting chaired by Powell, the Fed decided to keep the key interest rate unchanged, maintaining it at 5.25-5.50 percent. Chairman Jerome Powell signalled that a rate cut could be imminent, saying "A reduction in our policy rate could be on the table as soon as the next meeting in September."

The tone and reasoning behind the decision will set the stage for global market sentiment. Analysts say that while the markets have already priced in a 25-bps cut, a 50-bps cut could send a negative signal regarding economic health.

Oil fell on Wednesday after two sessions of gains after an industry report showed increasing U.S. crude and fuel inventories, offsetting rising tension in the Middle East and the potentially bullish impact of a U.S. interest rate cut.

U.S. crude stocks rose by 1.96 million barrels in the week ended Sept. 13, market sources said on Tuesday citing American Petroleum Institute figures. Gasoline and distillates inventories also increased.

Brent crude futures for November were down 92 cents, or 1.25%, at $72.78 a barrel at 1100 GMT. U.S. crude futures for October dropped 95 cents, or 1.33%, to $70.24.

US equity futures posted small gains as a watchful tone spread across global markets before the Federal Reserve’s interest-rate decision.

Contracts on the S&P 500 rose by about 0.2%, with the benchmark some 0.5% below its July record. Europe’s Stoxx 600 index retreated. The dollar slipped close to its weakest levels since January, while Treasury yields ticked higher.

Gold prices gained on Wednesday on a softer dollar amid investor caution ahead of the U.S. Federal Reserve's policy decision, which is expected to start its monetary easing cycle.

Spot gold was up 0.3% to $2,575.89 per ounce as of 1110 GMT. Bullion rose to a record high of $2,589.59 on Monday.

U.S. gold futures gained 0.4% to $2,602.40.

The dollar surrendered some of its overnight gains against the yen on Wednesday, as investors tweaked their positions ahead of a policy meeting expected to initiate a U.S. easing cycle.

The Federal Reserve is expected to make its first interest rate cut in more than four years at 1800 GMT, with markets pricing a 63% probability of a 50 basis point cut.

The dollar has fallen along with U.S. yields since July and at $1.1124 per euro is not far from the year's low at $1.1201 in anticipation of the U.S. easing at a clip, with more than 100 basis points of rate cuts priced in by Christmas.

The yen, up more than 12% since July, has been surging because the Bank of Japan - which sets policy on Friday - has been hiking rates at the same time as the Fed prepares to cut.

Bridgewater Associates founder Ray Dalio said the overall picture of the US economy probably warrants a smaller interest-rate cut by the Federal Reserve this week.

“The Fed has to keep interest rates high enough to satisfy the creditors that they are going to get a real return without having them so high that the debtors have a problem,” Dalio told Bloomberg Television correspondent Haslinda Amin in an interview in Singapore on Wednesday.

“Whether it’s 25 or 50 basis points, 25 basis points would be the right thing to do if you look at the whole picture,” Dalio said on the sidelines of the Milken Institute Asia Summit 2024. “If you look at the mortgage situation, which is worse and that affects more people, then it’s probably 50 basis points.”

JPMorgan Chase & Co. Chief Executive Officer Jamie Dimon said whether the central bank cuts rates by 25 or 50 basis points, the move is “not going to be earth-shattering.”

“They need to do it,” Dimon said at a conference on Tuesday. But “it’s a minor thing when the Fed’s raising rates and lowering rates because underneath that there’s a real economy.”

Bond investors that have been frantically wagering on the size of the Federal Reserve’s first interest-rate cut in four years are about to find out whether they made the right trade.

The market is fully pricing in a quarter-point rate reduction on Wednesday, when the US central bank is expected to kick off its rate-cutting cycle, with the chance of a bigger move viewed as a coin-flip. Treasuries have rallied into the decision, climbing for a fifth-straight month and driving short-dated yields — those most sensitive to Fed policy — to their lowest in two years.

All that enthusiasm for cuts is creating a risk of sharp losses for traders if officials opt for a more modest 25-basis-point reduction after all. Despite facing the most uncertain scheduled Fed meeting since 2007, futures traders have a record number of wagers riding on an outsized cut.

US equity futures kept to tight ranges as a watchful tone spread across global markets before the Federal Reserve’s interest-rate decision.

Traders are split over whether the US central bank will announce a cut of 25 or 50 basis points later Wednesday, with market-implied odds currently signaling a 55% chance of the bigger move.

Contracts on the S&P 500 were little changed, with the benchmark about 0.5% below its July record. Europe’s Stoxx 600 index retreated 0.4%. The dollar slipped close to its weakest levels since January, while Treasury yields ticked higher.

The Federal Reserve on Wednesday will lower interest rates for the first time in more than four years as the U.S. central bank starts to reverse the restrictive conditions it imposed to beat back inflation, but whether policymakers opt for a half-percentage-point cut or smaller move remains up in the air.

Their choice on how they want to kick off a new easing cycle - less than two months before what is expected to be a close U.S. presidential election - likely hinges more on what signal they want to send as they pivot from the highest interest rates in a quarter of a century than about expectations for near-term macroeconomic impact, even as their worries about the job market grow.

Not since the lead-up to the financial crisis have bond traders been so divided about the outcome of the next Federal Reserve decision.

With only two days to go, whether Fed policymakers will cut interest rates by a quarter-point or a half point is considered a tossup in US interest-rate markets. Except for the Fed’s emergency rate cut in March 2020 at the onset of the pandemic, that’s the greatest amount of doubt in interest-rate swap markets for any scheduled US central bank decision since 2007, according to data compiled by Bloomberg.

The meeting will end around 11:00 pm on Wednesday and the presser will begin half an hour later at 11:30 pm. All official channels of the US Fed will host this conference live. The clear guidance from Powell will impact the investors across the world. Apart from the quantum of the rate cut, the stance taken by Powell on inflation and unemployment will define the mood in global markets.

This is the two-day meeting, which will begin tonight (IST). FOMC meeting that begins on September 17 will conclude on September 18. US Fed chair will address media at some time around 11:30 pm (IST) on September 18, 2024.

Benchmark stock indices Sensex and Nifty hit fresh lifetime intra-day highs before closing lower on Wednesday due to profit booking in IT shares ahead of the keenly-awaited US Fed's decision on interest rates.

The 30-share BSE Sensex dropped by 131.43 points or 0.16 per cent to settle at 82,948.23 in a volatile trade. The index opened lower but cut short losses in late morning trade, climbing 246.72 points or 0.29 per cent to scale a new all-time intra-day peak of 83,326.38.

The barometer re-entered the negative territory in afternoon trade as investors preferred to book profits at record levels. Sensex hit a low of 82,700.63 in pre-close session.

The NSE Nifty declined by 41 points or 0.16 per cent to close at 25,377.55. During the day, it advanced 63.65 points or 0.25 per cent to hit a fresh intra-day lifetime high of 25,482.20.

Global shares were mixed Wednesday as investors awaited an expected interest rate cut by the US Federal Reserve, the first in more than four years.

France's CAC 40 lost 0.2% in early trading to 7,474.92, while Germany's DAX inched down less than 0.1% to 18,723.53. Britain's FTSE 100 shed 0.5% to 8,268.29. The future for the Dow Jones industrial average rose 0.1%, while that for the S&P 500 futures was up less than 0.1%.

The Bank of Japan and the Bank of England are also holding monetary policy meetings later this week. But neither central bank is expected to move on rates, although the language of what the officials say could be an indicator of later moves and still influence markets.

Asian markets advanced. Japan's Nikkei 225 gained 0.5% to finish at 36,380.17. Australia's S&P/ASX 200 was virtually unchanged, inching up less than 0.1% to 8,142.10. South Korea's Kospi added 0.1% to 2,575.41.