A Dovish Message Within a Hawkish Rate Cut

Market Reaction - The stock market reacted positively to the Fed's announcement of a 25 basis point rate cut, with the small-cap Russell 2000 reaching a new all-time high close and the S&P 500 coming within 5 points of its own all-time high [1][2] - The Dow increased by 497 points (+1.05%), the S&P rose by 46 points (+0.67%), while the Nasdaq lagged with a gain of 77 points (+0.33%) [2] Federal Reserve Actions - The Fed cut the Fed funds rate by 25 basis points to a range of 3.50-3.75%, with three dissents from the policy decision, marking the first dissent in six years [3] - The Fed will begin purchasing $40 billion in Treasury bills, a move that was earlier expected to be $20-30 billion, indicating a more aggressive approach to maintaining its balance sheet [4] Economic Outlook - The Fed's outlook for 2026 GDP increased by 0.5 percentage points to +2.4%, while the inflation rate is predicted to decrease by 10 basis points to +2.5% [5] - A majority of Fed members now advocate for one rate cut or fewer in the upcoming year, with some members favoring no cuts at all [5] Company Earnings - Oracle (ORCL) reported fiscal Q2 earnings of $2.26 per share, exceeding expectations, but revenues of $16.1 billion fell slightly short of the $16.15 billion forecast [7][8] - Adobe Systems (ADBE) reported fiscal Q4 earnings of $5.50 per share, surpassing expectations, with revenues of $6.19 billion also exceeding estimates [9] - Synopsys (SNPS) posted fiscal Q4 earnings of $2.90 per share on revenues of $2.26 billion, both figures beating analyst expectations [10]