Federal Reserve Board Chairman Jerome Powell signaled that the Fed expects to hold off on further rate actions after cutting interest rates for the third straight time (Eric BARADAT )

New York (AFP) – Wall Street stocks rallied and the dollar retreated Wednesday after the Federal Reserve cut interest rates and signaled it expects to hold off on further rate changes for now.

The Fed’s action marked its third straight interest rate cut. Fed Chairman Jerome Powell said trade wars and Brexit uncertainty had weighed on business investment but that the US economy had stayed “resilient.”

“We took this step to help keep the US economy strong in the face of global developments and to provide some insurance against ongoing risks,” Powell said.

Stocks were little changed before the Fed announcement but pushed higher after the central bank released its decision at 1800 GMT. The S&P 500 gained 0.3 percent, rising to 3,046.77 and scoring its second record in three days.

Earlier, European stocks finished mixed while bourses in Asia retreated.

“The street got very much what they expected and therefore is breathing a sigh of relief,” said Art Hogan, chief market strategist at National Securities. 

The dollar retreated against the euro and the pound.

Shaun Osborne, chief FX strategist at Scotiabank, cited Powell’s comments on low inflation, which suggested the US central bank would not be in a rush to hike interest rates.

“The market was concerned about interest rates rising again in 2020,” Osborne said. “It has calmed the concern for the time being.”

News that auto giants Fiat Chrysler and Peugeot-maker Groupe PSA were in talks on a possible $50-billion (45-billion-euro) mega merger sparked local interest, with both shares making sharp gains.

In Paris, PSA rallied 5.4 percent while in Milan Fiat Chrysler Automobiles (FCA) surged 10 percent.

A merger would bring PSA access to the lucrative US market, while helping it survive the twin impact of the global economic slowdown and trade war worries, analysts said.

A source familiar with the matter told AFP on Wednesday afternoon that the board of PSA had approved the proposed tie-up but that the deal still needs to be given the green light by FCA’s board.

Among other companies, General Electric shot up 11.5 percent after reporting better-than-expected third-quarter profits and boosting some of its financial targets despite reporting another large loss.

Boeing dropped 0.8 percent after Chief Executive Dennis Muilenburg endured another grilling on Capitol Hill over the company’s development of the 737 MAX, which has been grounded following two fatal crashes. At least two lawmakers called for Muilenburg to resign over the crisis.

 – Key figures around 2100 GMT – 

New York – Dow: UP 0.4 percent at 27,186.69 (close)

New York – S&P 500: UP 0.3 percent at 3,046.77 (close)

New York – Nasdaq: UP 0.3 percent at 8,303.98 (close)

London – FTSE 100: UP 0.3 percent at 7,330.78 (close)

Frankfurt – DAX 30: DOWN 0.2 percent at 12,910.23 (close) 

Paris – CAC 40: UP 0.5 percent at 5,765.87 (close)

EURO STOXX 50: DOWN 0.1 percent at 3,620.29 (close)

Tokyo – Nikkei 225: DOWN 0.6 percent at 22,843.12 (close)

Hong Kong – Hang Seng: DOWN 0.4 percent at 26,667.71 (close)

Shanghai – Composite: DOWN 0.5 percent at 2939,32 (close)

Pound/dollar: UP at $1.2899 from $1.2862 at 2100 GMT

Euro/pound: UP at 86.42 pence from 86.40 pence 

Euro/dollar: UP at $1.1149 from $1.1112

Dollar/yen: DOWN at 108.85 yen from 108.89 yen

Brent North Sea crude: DOWN 1.6 percent at $60.61 per barrel

West Texas Intermediate: DOWN 0.9 percent at $55.06 per barrel

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Disclaimer: Validity of the above story is for 7 Days from original date of publishing. Source: AFP.