7-31-19 4:26 PM EDT | Email Article

Producers of metals and other raw materials fell after Federal Reserve Chairman Jerome Powell suggested that Wednesday's rate cut would not be the start of a new easing cycle, but rather part of a "mid-cycle adjustment."

A quarter-percentage point rate cut was already priced into the stock market when the Fed confirmed it was making its first cut since 2008, strategists said. But investors may have been surprised in the positive reading on current economic conditions that opened the Fed statement, according to one strategist. "The question is: are we going to see more cuts? The Fed certainly left the door open to that, but they haven't hinted that more are coming," said Brad McMillan, chief investment officer for the Commonwealth Financial Network. "If you read [the statement], you think we don't actually need more cuts here...This is the back door way of saying, 'we're back to data dependent.'"

In a press briefing after the statement hit the tape, Mr. Powell acknowledged there was some insurance aspect to the rate cut and noted the resilience of economic data since the last meeting. Mr. Powell also said that trade tensions seemed to be having a significant effect on the U.S. economy, however. Rate-sensitive sectors fell sharply after Mr. Powell's comment that the rate cut was not necessarily the beginning of a series of moves, although he noted that he was not ruling out more than one cut.


Write to Rob Curran at rob.curran@dowjones.com

(END) Dow Jones Newswires

July 31, 2019 16:26 ET (20:26 GMT)

Copyright (c) 2019 Dow Jones & Company, Inc.
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