Wall Street waffles around its records after the Fed cuts rates but won't guarantee more

NEW YORK (AP) — U.S. stocks bounced around their records on Wednesday after the Federal Reserve made moves to boost the job market but also warned that more help isn’t guaranteed.

The S&P 500 finished virtually flat and edged down by less than 0.1%. The Dow Jones Industrial Average dipped 73 points, or 0.2%, and the Nasdaq composite rose 0.5%. All three indexes were coming off an all-time high.

Stocks had been on track for modest gains in the afternoon after the Fed cut its main interest rate for the second time this year in hopes of helping the slowing job market. But the market snapped lower after Chair Jerome Powell later warned that it “is not a foregone conclusion” that the Fed will cut again in December at its next meeting, “far from it.”

“That needs to be taken off the board,” Powell said.

The warning hit Wall Street because traders saw a cut in December as a near certainty, along with potentially more in 2026, and they had already driven stock prices to records in part because of it. Powell said officials had “strongly differing views about how to proceed in December.”

Even Wednesday’s decision to cut came with less authority than expected. One member of the Fed’s committee, Jeffrey Schmid, voted to keep the federal funds rate steady now instead of lowering it.

In the meantime, the deluge continued of big U.S. companies reporting how much profit they made during the summer, and the frenzy in artificial-intelligence technology is driving growth. The pressure is on companies to deliver gains because that’s one way they can quiet criticism that their stock prices have shot too high.

Teradyne soared 20.5% for the biggest gain in the S&P 500 after the company, which makes automated test equipment and advanced robotics systems, reported stronger profit for the latest quarter than analysts expected. CEO Greg Smith credited strength related to artificial-intelligence applications and said “AI-related test demand remains robust.”

Nvidia, meanwhile, climbed 3%. The poster child of the AI boom became the first company valued at $5 trillion on Wall Street, just three months after it was the first to break through the $4 trillion barrier.

Even Caterpillar, the company known for its construction and mining equipment, is feeling a boost because of AI. It rallied 11.6% after reporting stronger profit and revenue for the latest quarter than analysts expected. The strongest growth came from Caterpillar’s business that provides equipment for big data centers that are powering AI.

On the losing end of Wall Street was Fiserv, which plunged 44% for its worst day since its stock began trading in 1986. The payments and financial technology company reported weaker profit for the latest quarter than analysts expected, slashed its profit forecast for the year and revamped its board of directors and leadership team.

Mondelez International fell 3.9%, even though it reported stronger results than analysts expected. The company, whose brands include Oreo cookies and Toblerone chocolate, has been dealing with sharp increases for the cost of cocoa. It expects challenging conditions to continue in some markets, though it hopes that price increases are moderating for cocoa.

All told, the S&P 500 edged down by 0.30 to 6,890.59 points. The Dow Jones Industrial Average fell 74.37 to 47,632.00, and the Nasdaq composite rose 130.98 to 23,958.47.

In stock markets abroad, indexes were mixed in Europe following a stronger finish in Asia.

Tokyo’s Nikkei 225 jumped 2.2% to another record, while Seoul’s Kospi rose 1.8% to its own all-time high after President Donald Trump met with South Korea’s leader following his visit in Japan.

Stocks rose 0.7% in Shanghai ahead of a meeting between Trump and China’s leader, Xi Jinping. The world’s two largest economies have been locked in an escalating trade war, with Washington imposing high tariffs and tightened technology controls and China retaliating with curbs on rare earth shipments, one of its key sources of leverage.

In the bond market, the yield on the 10-year Treasury rose to 4.07% from 3.99% late Tuesday as traders pared their bets for a coming cut to rates in December.

The Fed has been warning that it may have to halt cuts if inflation accelerates beyond its still-high level, because lower rates can worsen inflation.

Making an already tough course for Fed officials more difficult is the U.S. government’s shutdown. That has delayed important updates on the economy that would normally help guide the Fed’s decision-making process.

___

AP Business Writers Matt Ott and Elaine Kurtenbach contributed.