Tech stocks rallied Wednesday after the Federal Reserve delivered a 25-basis-point rate cut and Fed Chair Jerome Powell signaled more easing could be coming — a shift partly driven by a cooling labor market and growing downside risks to employment.
The Nasdaq 100 – as closely tracked by the Invesco QQQ Trust (NASDAQ:QQQ) – recouped all morning losses and turned positive heading into the close, reclaiming the 24,200-point area. Tech stocks had slumped earlier in the session, with AI-linked names like Nvidia Corp. (NASDAQ:NVDA), Broadcom Inc. (NASDAQ:AVGO) and Palantir Technologies Inc. (NYSE:PLTR) falling as much as 3% after China announced a ban preventing domestic firms from purchasing Nvidia's AI chips.
The Fed’s cut lowers the federal funds target to 4.00%-4.25%, marking the Fed’s fourth rate reduction in the current easing cycle, and its first move after a nine-month pause.
It also comes after months of public pressure from President Donald Trump, who has repeatedly called for lower rates to support consumption and investment.
The quarter of a percentage point rate cut was not unanimous. Fed Governor Stephen Miran, a recent Trump appointee replacing Adriana Kugler, dissented — arguing in favor of a 50-basis-point cut instead.
Tech Stocks Making Large Gains During Powell’s Remarks
According to Benzinga Pro data, the top-performing stocks with market capitalizations above $10 billion during Powell's speech from 2:30 to 3:30 p.m. ET included:
- Nebius Group (NASDAQ:NBIS) up 4.28%,
- SanDisk (NASDAQ:SNDK) up 3.51%,
- IonQ Inc. (NYSE:IONQ) up 3.29%,
- Oklo Inc. (NYSE:OKLO) up 2.93%,
- Reddit Inc. (NYSE:RDDT) up 2.92%,
- Joby Aviation Inc. (NYSE:JOBY) up 2.74%,
- Nio Inc. (NYSE:NIO) up 2.64%,
- Palantir Technologies Inc. up 2.60%,
- Tesla Inc. (NASDAQ:TSLA) up 2.44%,
- Roblox Corp. (NYSE:RBLX) up 2.42%.
What Jerome Powell Said
Powell said the Federal Reserve's decision to cut rates by 25 basis points was driven by a shift in the balance of risks between inflation and employment, with the labor market now showing clearer signs of softening.
Powell called the move a "risk management cut," clarifying that while economic growth projections have ticked up modestly, the Fed is now acting preemptively to support the labor market before a downturn takes hold.
On inflation, Powell acknowledged that headline and core PCE inflation remain elevated — at 3.0% and 3.1% for 2025, respectively — but said the recent rise in goods prices, partly linked to tariffs, is not expected to lead to a sustained inflation breakout.
"A reasonable base case is that the effects on inflation will be relatively short-lived," he said.
Still, Powell added, "Our job is literally to make sure that that is what happens," underscoring the Fed's continued commitment to its 2% inflation target.
Asked whether the Fed's independence is being compromised given President Trump's growing influence and the recent appointment of a new FOMC member with executive branch ties, Powell said: "The committee remains united in pursuing our dual mandate goals. We’re strongly committed to maintaining our independence."
The Summary of Economic Projections now implies a federal funds rate of 3.6% by the end of 2025, lower than the 3.9% median estimate from June, suggesting more cuts could be on the table.
However, Powell ruled out a larger 50-basis-point move for now. "There wasn't widespread support at all for a 50-point cut," he said, adding that large moves are typically reserved for moments when the policy stance is "clearly in the wrong place," which is not the case today.
The Fed, Powell said, has moved one step closer to neutral — but stands ready to act again if the labor market deteriorates further or inflation surprises on the upside. "There is no risk-free path here," he said.
Asked whether the current rate cuts risk fueling a financial bubble, Powell responded that despite record equity levels, there is no evidence of systemic imbalances.
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Image created using artificial intelligence via Midjourney.
