Stock investors aren’t impressed by the Fed’s long-awaited rate cut

• US stocks saw tepid moves after the Fed delivered its first rate cut of the year on Wednesay.

• Investors had been pricing the cut for weeks, and some on Wall Street predicted it could be a sell-the-news event.

The Fed finally gave the stock market what it had been waiting for all year. Too bad it was mostly priced in before the central bank made its big announcement.

US stocks jumped initially on the 25-basis-point rate cut, but drifted lower as Chairman Jerome Powell began his press conference.

The 10-year US Treasury yield, which reflects long-term interest rates in the economy, initially ticked lower by two basis points, but then jumped 4 basis points higher to trade around 4.07%.

Here’s where US indexes stood around 3:20 p.m. ET on Wednesday:

Investors have been waiting for the Fed to resume its rate-cutting cycle all year and had been pricing in a cut in September with near certainty for about a month.

“It’s very much, ‘we bought the rumor, now we’re selling the news’ to a certain extent, and that’s not unusual,” Art Hogan, chief market strategist at B. Riley Wealth, told Business Insider.

“I suspect the kind of real reaction happens tomorrow,” he added. “Everyone gets a chance to sort of sleep on it and say, ‘how much of this did we expect? How much of this is at a consensus? And how much of this has been priced in?'”

Some top Wall Street analysts had also recently warned that a rate cut could ultimately be a tepid event for markets.

“We have concerns that the September 17 Fed meeting which delivers a 25bp cut could turn into a ‘Sell the News’ event as investors pullback to consider macro data, Fed’s reaction function, potentially stretched positioning, a weaker corporate buyback bid, and waning participation from the Retail investor,” JPMorgan’s head of global market intelligence, Andrew Tyler, wrote last week.

Fed Chair Powell pointed to recent weakness in the labor market as a factor in the decision to cut rates. Job growth in the US has likely fallen below the breakeven rate, the pace it would need to keep unemployment steady, he said.

“Overall, the market slowing in both the supply of and demand for workers is unusual,” Powell added.

Markets also took in the Fed’s latest Summary of Economic Projections. In the Fed’s dot plot, central bankers pencilled in two more rate cuts through the end of the year, reflecting a steeper pace of easing than what was forecast at its June policy meeting.