Dow plummets 1,100 points after Fed scales back plans for profit rate cuts

The ownership trade plunged on Wednesday after the Federal safety net scaled back its expectations for profit rate cuts next year.

The Dow Jones Industrial Average fell about 1,100 points, or 2.5%, the largest drop for the index since August. The dip marked the 10th consecutive day of losses for the Dow, its longest losing streak since 1974.

The S&P 500 fell nearly 3%, while the tech-heavy Nasdaq plummeted about 3.5%.

The Fed cut profit rates a quarter of a percentage point on Wednesday, but the central lender also announced a fresh projection calling for fewer profit rate cuts than expected just a few months ago.

The Fed’s projection on Wednesday said it anticipates only a half a percentage point of rate cuts next year and another half-percent cut in 2026. In September, the Fed had forecasted a percentage point of cuts next year and an additional half-percent cut in 2026.

Lower profit rates typically stimulate economic activity over the long term, keeping the economy growing and safeguarding the labor trade. They also tend to drive up corporate profits and ownership prices.

Speaking at a press conference in Washington, D.C., on Wednesday, Fed Chair Jerome Powell said the central lender may proceed at a slower pace with upcoming rate cuts, partly because it has now substantially lowered profit rates.

Powell also said a recent resurgence of expense boost influenced the Fed’s expectations, noting that some policymakers considered uncertainty tied to potential policy changes under Trump.

“It’s ordinary-sense thinking that when the path is doubtful, you get a little slower,” Powell said. “It’s not unlike driving on a foggy night or walking around in a dim room packed of furniture.”