Stocks dive after Fed cuts rates, signals slower easing pace in 2025

U.S. stocks plunged on Wednesday, with all three major indexes posting their biggest daily decline in months, after the Federal Reserve cut interest rates by a quarter of a percentage point but disappointed some investors with projections that signaled a more cautious path of easing next year. The Fed cut rates by 25 basis points to the 4.25%-4.50% range and its summary of economic projections (SEP) indicated it will make rate cuts totaling a half percentage point by the end of 2025 given the solid labor market and the recent stall in lowering inflation. "If you look at the changes to the statement of economic projection, they really had no choice," said Ellen Hazen, chief market strategist at F.L.Putnam Investment Management in Wellesley, Massachusetts.