(Bloomberg) — Stocks hit new all-time highs, Treasury yields fell and the dollar fell the most since August, with traders closely watching Jerome Powell’s remarks after the Federal Reserve cut interest rates. a quarter of a percentage point to support the economy. .

The S&P 500 was up 0.7%. Yields on the 10-year Treasury fell nine basis points to 4.34%. The Bloomberg Dollar Spot Index fell 0.7%. The Fed chairman said he did not rule out a rate cut in December. He said recent indicators suggest the economy continues to grow solidly. Even though inflation expectations remain anchored, underlying prices remain somewhat elevated, he said. Powell added that in the short term, the election will have no effect on policy.

U.S. policymakers voted unanimously to lower the benchmark rate to a target range of 4.5% to 4.75%. They changed the wording to note that “labor market conditions have generally improved” and reiterated that “the unemployment rate has increased but remains low.” The statement removed reference to “further” inflation progress, noting that inflation “has progressed toward the committee’s 2 percent target but remains somewhat elevated.”

Wall Street reaction to the Fed:

No jump signs here. I think it’s a good thing that the Fed didn’t blame the recent labor market downturn on hurricanes or strikes. They just stick with what has generally subsided. This statement does not involve a December jump.

Today’s Fed meeting was low drama for market participants, as a 25 basis point rate cut was fully expected.

We believe the Fed will move cautiously in 2025 to assess whether President Trump’s economic proposals will ultimately become real policies and how those policies will ultimately affect inflation, labor markets, and overall economic growth. As always, the Fed will be guided by economic data.

The balance of risks gives the Fed ample room to lower the Fed Funds rate through 2025. Markets should not expect very large rate cuts unless the economy turns to the south, and that doesn’t seem likely at all for some time.

With additional data on inflation and employment, the Fed raised 25 basis points as expected. We expect the same thing to happen in December. However, stronger data and uncertainty over fiscal and trade policies mean growing risks that the Fed will choose to slow the pace of its easing. The word “jump” could enter our vocabulary in 2025.

The Federal Reserve continues to take its foot off the brake pedal, cutting interest rates by a quarter of a percentage point as expected. The solid pace of economic growth means the Fed can abandon the urgency seen with September’s half-point cut and adopt a more deliberate, quarter-point pace with this and future rate cuts. .

Investors are seeking balance after being reeling from such large rate moves over the past two months. Predictably, investors had developed unreasonable expectations about the extent of rate cuts in the coming quarters and now, with their focus on deficits, markets must reorient themselves to reality.

Some of the main market movements:

This story was produced with the help of Bloomberg Automation.

–With help from Rheaa Rao.

More stories like this can be found at bloomberg.com