Dow Jones falls 400 points from the highs to end with cuts after Jerome Powell spooks Wall Street

Benchmark indices on Wall Street had a mixed session but all of them closed significantly off the highs of the day after remarks from Federal Reserve Chair Jerome Powell on the future trajectory of interest rate cuts.

The Dow Jones ended with losses of close to 80 points, but that is due to a 400-point drop from the highs of the day. The S&P 500 ended 30 points off the day's high, while the Nasdaq outperformed courtesy of Nvidia, ending with gains of over 0.5%.

The US Federal Reserve cut interest rates by 25 basis points on Wednesday night on expected lines, but Fed Chair Jerome Powell, in his post-policy remarks said that a cut in December is "not a foregone conclusion." He also said that there is growing chorus among the 19 FOMC members to at least wait a cycle before resuming the cuts.

Powell's remarks were not well received by the street, who had already factored in another 25 basis point rate cut in December. The probability of that on the CME Fedwatch tool has now dropped to 67% from 90% before the policy statement.

In response to Powell's policy, futures on Wall Street are down between 80 points to 100 points. This is also a reaction to results reported by big tech firms Meta, Microsoft and Google-parent Alphabet after market closing. Another victim of the Fed's "hawkish cut" has been Gold, with futures prices declining well below the $4,000 an ounce mark. Lesser cuts from the Fed are negative for bullion prices as they it does not yield any interest.

The other highlight of Wednesday's session on Wall Street was Nvidia touching the $5 trillion mark in market capitalisation. The chip manufacturer is now technically the world's third-largest economy after the US and China. The last trillion dollars to its market capitalisation were added in just 79 sessions, having crossed $4 trillion in July.

All eyes are now on the meeting between US President Donald Trump and Chinese President Xi Jinping, scheduled to take place in a few minutes from now in South Korea. But while the market is factoring in some mega announcements, experts are skeptical of major details emerging from the summit that is scheduled to go on for at least four hours.

Big tech results continue later today as well, with companies such as Apple and Amazon reporting after the bell. Amazon has been in the spotlight for its recent layoffs, while Apple commentary on the future outlook will be in focus after a positive response to its recently launched iPhone 17. The stock also crossed $4 trillion in market capitalisation on Tuesday and is trading near record high levels.