PARIS (Reuters) – The New York Stock Exchange ended lower on Wednesday as investors questioned the possibility of a “soft landing” for the U.S. economy after the Federal Reserve’s unexpectedly large 50 basis point rate cut.

The Dow Jones Industrial Average fell 0.25 percent, or 103.08 points, to 41,503.10. The broader Standard & Poor’s 500 lost 16.32 points, or 0.29 percent, to 5,618.26.

The Dow Jones and the S&P 500 nevertheless reached records during the session, before falling back.

The Nasdaq Composite fell by 54.76 points, or 0.31%, to 17,573.301 points.

The Fed announced on Wednesday that it was lowering its target for fed funds rates by 50 basis points to 4.75%-5.00%, a cut of a greater magnitude than expected by most observers, leaving operators uncertain about the trajectory of rates and the American economy.

A rate cut of this magnitude may suggest that the central bank is lagging behind activity, making a recession more likely because monetary policy has a lagged effect on the economy.

“I don’t see anything in the economy right now that suggests that the risks of a recession would be elevated,” said Fed Chairman Jerome Powell, who also stressed that the central bank would cut rates without rushing in the future.

“The time to support labor markets is when they are strong,” added Jerome Powell, who believes the economy remains close to full employment.

The central bank slightly lowered its growth forecast for 2024, to 2.0% from 2.1% expected in June, and revised upwards the unemployment rate for 2024, to 4.4% from 4.0% projected in June.

“Nothing in our projections suggests that we are in a hurry to cut rates,” the Fed chairman said.

“The Fed’s decision today was in line with market expectations. The 50 basis point cut suggests that the Fed agrees with the market, according to which the easing cycle is starting a little late,” sums up Carlos de Sousa, portfolio manager at Vontobel.

Intuitive Machines surged after landing a $4.8 billion contract from NASA.

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(Written by Corentin Chappron, edited by Zhifan Liu)

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