The Federal Reserve’s half point rate cut took center stage yesterday as the Fed announced “The fundamentals of the U.S. economy remain strong. However, the coronavirus poses evolving risks to economic activity.
In light of these risks and in support of achieving its maximum employment and price stability goals, the Federal Open Market Committee decided today to lower the target range for the federal funds rate by 1/2 percentage point, to 1 to 1‑1/4 percent. The Committee is closely monitoring developments and their implications for the economic outlook and will use its tools and act as appropriate to support the economy.” The market reaction was somewhat less than what was hoped for, with the Dow Industrials down more than 800 points (-3.1%) in late afternoon trading on Tuesday while the US Dollar Index dropped 0.4%. In commodity trading, COMEX copper futures reversed course, dipping below $2.58 per pound. But the Bloomberg Commodity Index was up around 1 percent late in the day yesterday as crude oil futures rose above $47 per barrel and precious metal prices climbed nearly 3 percent higher.