The US stock market has been on a rollercoaster ride lately, and yesterday was no exception. Traders woke up to a surprise rate cut from the Federal Reserve, which sent shockwaves through the financial world. The central bank slashed its overnight lending rate to a range of 4.75% to 5.00%, marking the first rate reduction in four years.

As news of the rate cut spread, stock futures soared. Dow Jones Industrial Average futures jumped 100 points, or 0.2%, while futures tied to the S&P 500 and Nasdaq 100 climbed 0.4% and 0.5%, respectively. It seemed like a perfect storm for investors, with many expecting the Fed to cut rates further in the future.

However, the market's euphoria was short-lived. As the day went on, stocks began to falter. The S&P 500 and Dow Jones Industrial Average ultimately closed lower, despite initially rallying to new record highs after the Fed's announcement.

So, what caused the sudden change of heart? According to Tom Porcelli, chief US economist at PGIM Fixed Income, it was Fed Chairman Powell's emphasis on the initial 50-basis-point rate cut not setting the precedence for further drastic rate reductions. In other words, Powell didn't commit to future rate cuts, leaving investors feeling uncertain.

Futures Market Rattles as Fed Rate Cut Raises Questions

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