Closing Bell: Fed Cuts Rates and Starts Balance Sheet Shift

Key Points

• Fed cuts rates 25 bps and signals risks are shifting toward the labor market, while announcing $40B in Treasury bill purchases starting Friday.
• Markets rally with the S&P 500 up 0.67%, Nasdaq-100 up 0.42%, and Russell 2000 up 1.32% as cyclicals lead the advance.
• Oracle slips after-hours as revenue misses expectations

Markets moved higher after the FOMC announced a 25-basis-point rate cut, detailed plans to adjust its balance sheet by purchasing Treasury bills going forward, and emphasized that near-term risks now appear more weighted toward the labor market than inflation. The S&P 500 (SPX) closed up 0.67%, the Nasdaq-100 (NDX) gained 0.42%, and the Russell 2000 (RUT) outperformed with a 1.32% advance. Industrials, Materials, and Consumer Discretionary led sector performance, while Utilities and Consumer Staples lagged.

Federal Reserve Cuts 25 Basis Points

The Federal Reserve lowered the overnight lending rate by 25 basis points, setting a new target range of 3.50% to 3.75%. Although policymakers remain divided on the pace of rate cuts in 2026, the committee noted that the balance of risks has shifted more toward potential labor-market weakness. The Fed also announced it will begin purchasing $40 billion in Treasury bills to ensure ample liquidity in short-term funding markets.

Oracle Misses Revenue Estimates

Oracle shares moved lower in after-hours trading after the company reported results that fell short of analyst expectations. Revenue came in at $16.06 billion versus consensus estimates of $16.21 billion. Adjusted Q2 EPS was reported at $2.26, above the $1.64 estimate, though the beat included a one-time positive adjustment tied to an asset sale. Cloud revenue grew 34% year over year.

Key Market Events for Tomorrow

• 08;30 AM ET: Unemployment Claims
• 08:30 AM ET: Trade Balance
• 10:00 AM ET: Final Wholesale Inventories
• 10:30 AM ET: Natural Gas Storage
• 01:00 PM ET: 30-YR Bond Auction

Notable Earnings for Tomorrow

• Premarket: CIEN, LOVE, MANU, RCT
• Postmarket: AVGO, COST, LULU, RH

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