TLDR
- Federal Reserve cuts interest rates by 0.25% to 4.00%-4.25% range in 11-to-1 vote
- Fed projects two additional rate cuts before end of 2025 due to labor market concerns
- Nvidia announces $5 billion strategic investment in Intel, boosting Intel stock 30%
- Stock market futures rally Thursday with Nasdaq leading 1.2% gains
- Fed Chair Powell cites employment risks and inflation as key decision factors
The Federal Reserve delivered a quarter-point interest rate cut Wednesday, reducing the benchmark rate to 4.00%-4.25% as concerns over the labor market intensified. The widely anticipated move passed with an 11-to-1 vote, with Governor Stephen Miran dissenting in favor of a larger half-point reduction.
Fed Chair Jerome Powell described the cut as “risk management” while noting that job gains have slowed and inflation remains elevated. The central bank’s statement highlighted that “downside risks to employment have risen” as unemployment reached 4.3% in August.
The Fed’s dot plot projections indicate two more rate cuts are likely before year-end. Ten of 19 officials expect cuts at both the October and December meetings, while nine see only one additional reduction this year.
Stock market futures surged Thursday morning following the Fed decision and major corporate news. Nasdaq 100 futures led gains with a 1.2% increase, while S&P 500 futures rose 0.8% and Dow futures climbed 0.7%.
Nvidia’s Intel Investment Boosts Tech Sector
The market rally gained momentum from Nvidia’s announcement of a $5 billion investment in struggling chipmaker Intel. Intel shares jumped nearly 30% in premarket trading as investors welcomed the strategic partnership between the semiconductor giants.
The investment represents a lifeline for Intel, which has faced manufacturing challenges and competitive pressures. However, the deal stops short of providing Intel with the crucial manufacturing contracts many analysts expected.
Recent labor market data has influenced Fed policy decisions. The Bureau of Labor Statistics revealed the economy created nearly one million fewer jobs than initially reported in the 12-month period prior to March 2025. This revision has heightened concerns about employment trends.
Powell noted that monetary policy is now in a “more neutral” position compared to previous restrictive stances. The Fed’s economic projections showed slightly faster growth than June forecasts, while unemployment and inflation outlooks remained unchanged.
Political Pressure and Economic Outlook
President Trump has pressured the Fed throughout the summer for more aggressive rate cuts to support the housing market and reduce government financing costs. The political backdrop has added complexity to Fed communications and decision-making processes.
The central bank projects one additional cut in 2026, moving more slowly than current market expectations. Officials also anticipate another reduction in 2027 as rates approach the long-term neutral level of 3%.
Markets are positioned for new highs if Thursday’s premarket gains hold. The S&P 500 could cross 6,700 at the open after closing above 6,600 earlier this week. All major U.S. indexes have posted September gains despite the month’s historically weak performance.
FedEx reports quarterly results Thursday evening, with analysts expecting pressure from Trump’s elimination of tariff exemptions on low-value Chinese packages. These shipments account for roughly three-quarters of duty-free packages under $800 annually.
Powell emphasized that uncertainty about the economic outlook remains elevated, with the Fed monitoring both inflation and employment risks closely.
