Wall Street ended marginally higher on Fed day

On the day of he Federal Reserve, the Dow Jones Industrial Average added 36.28 points, or 0.1% to 27,147, while the S&P 500 put on less than 0.1%, to 3,006.73. The Nasdaq slid a mere 8.63 points, or 0.1%, to close at 8,177.39. At session lows, the Dow was down 211.65 points while the S&P dropped 26.97 points and the Nasdaq lost 99.80 points.

The Fed cut the target range for the federal funds rate by 25 bps, but the IOER rate and the O/N RRP rate were cut by 30 bps in reaction to the repo turmoil this week. "However, a more lasting effect would be achieved by raising the level of reserves in the system and launching a standing repo facility. Unfortunately, the Fed is not ready to take these decisions yet. Consequently, we are likely to see more overnight repo operations by the New York Fed in the near term.

Feedback loop between trade policy and monetary policy is likely to lead to another insurance cut

We stick to our view that the feedback loop between trade policy and monetary policy is likely to lead to another insurance cut before the end of the year, but we change our call for the most likely timing from October to December as the divergence of views in the FOMC appears to be leading to temporary policy paralysis on the fed funds rate. In fact, there were three dissenters today. Rosengren and George were against lowering the fed funds rate; in contrast Bullard wanted a 50 bps cut," analysts at Rabobank explained.

DJIA levels

The technical picture remains the same, with that bearish doji daily candle formation through the 27200s leaving a bearish bias on the charts. Considering the Fed, the bears can target the 21-DMA, the 50 and then the 200 DMA. Further below lies the May and Jun lows in the 24700s as a double-bottom target.