US Equity Indexes Rise After Fed Unveils Timeline for End of Quantitative Tightening, Lifts Growth Outlook

05:19 PM EST, 12/10/2025 (MT Newswires) -- US equity indexes rose on Wednesday after the Federal Reserve cut interest rates for the third straight time, while placing a timeline on the end of quantitative tightening and raising the outlook for economic growth next year.

The Dow Jones Industrial Average jumped 1.1% to 48,057.75, with the S&P 500 up 0.7% to 6,886.68. The Nasdaq Composite rose 0.3% to 23,654.16, clawing back all its declines from earlier in the session.

Industrials, materials and consumer discretionary led the top gainers. Technology and communication services were among the laggards.

The Fed reduced its benchmark lending rate by 25 basis points on Wednesday, with three members of the rate-setting committee dissenting from the majority, according to the Fed. It decided to conclude the reduction of its aggregate securities holdings as of Dec. 1, with Fed Chair Jerome Powell clarifying that the balance sheet will be "frozen" and maturing agency securities will be reinvested into Treasury bills.

"Everyone around the table ... agrees that inflation is too high and that we want it to come down, and (everyone) agrees that the labor market has softened and that there's further risk," he said.

The Fed's Summary of Economic Projections continued to show the median federal funds rate at 3.4% at the end of 2026, unchanged from the previous iteration in September. The 2027 and 2028 rate outlooks were also maintained at 3.1% each. The SEP raised its 2026 median real gross domestic product growth expectations to 2.3% from 1.8%. The figure was revised higher to 1.7% from 1.6% for this year.

Following the Fed announcements, the probability of another interest rate cut in each of the first three months of 2026 jumped, according to the CME FedWatch tool. The highest probability gain for a 25-basis-point cut was in March, with the likelihood rising to over 41% from just under 34% a day prior.

Treasury yields retreated following Powell's briefing, with the 10-year slumping 3.1 basis points to 4.16% and the two-year diving 6.9 basis points to 3.54%.

The ICE US Dollar Index, which reflects the greenback's performance against a basket of the world's major currencies, depreciated 0.6% to 98.65.

Gold futures shed 0.3% to $4,224.70, and silver futures rose 0.4% to $61.03.

In energy markets, West Texas Intermediate crude oil futures added 0.4% to $58.46 a barrel, after trading lower for most of the session before the Fed policy announcement.

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