* Gold slips, dollar gains ground
* Oil prices cool after Saudi production pledge
(Updates to late afternoon)
By Stephen Culp
NEW YORK, Sept 18 (Reuters) - U.S. stocks extended their
losses and the U.S. Treasury yield curve flattened on Wednesday,
after the U.S. Federal Reserve cut interest rates, as expected,
but gave mixed signals regarding future rate moves.
All three major U.S. stock indexes fell in choppy trading,
and the spread between 2-year and 10-year U.S. Treasuries
flattened to 3 basis points.
The U.S. central bank, on a 7-3 vote, lowered the Fed funds
target rate to a range of 1.75% to 2.00% "in light of the
implications of global developments for the economic outlook as
well as muted inflation pressures," although it said the U.S.
economy continues to grow at a "moderate" pace and the labor
market "remains strong." The rate cut fell short of the more aggressive reduction in
borrowing costs that President Donald Trump had demanded.
At a news conference following the policy decision, Fed
Chair Jerome Powell said rates were lowered to keep the economy
strong and provide insurance against risk, adding that the Fed
is closely monitoring economic data, trade and global growth
risks.
"The Fed's cut was in line with consensus expectations,"
said Mark Grant, managing director and chief global strategist
at B. Riley FBR, Inc in Fort Lauderdale, Florida. "Their future
outlook will certainly not please our president. Chairman
Powell's position that we are in a 'mid-cycle adjustment' seems
to be what has driven the Fed to their conclusion."
The Dow Jones Industrial Average .DJI fell 96.29 points,
or 0.36%, to 27,014.51, the S&P 500 .SPX lost 14.07 points, or
0.47%, to 2,991.63, and the Nasdaq Composite .IXIC dropped
55.73 points, or 0.68%, to 8,130.28.
The MSCI world equity index .MIWD00000PUS , which tracks
shares in 47 countries, fell 0.35%.
The U.S. Treasury yield curve flattened as Powell spoke,
with the 2-year gaining ground against the benchmark 10-year.
Benchmark 10-year notes US10YT=RR last rose 6/32 in price
to yield 1.7944%, from 1.814% late on Tuesday. The 30-year bond
US30YT=RR last rose 27/32 in price to yield 2.2413%, from
2.28% late on Tuesday.
The dollar strengthened to a near seven-week high against
the yen following the Fed's rate cut. The dollar
index .DXY rose 0.27%, with the euro EUR= down 0.36% to
$1.1031.
The Japanese yen weakened 0.19% versus the greenback at
108.37 per dollar, while sterling GBP= was last trading at
$1.2494, down 0.05% on the day.
Oil prices edged lower after Saudi Arabia said it would
quickly restore full production following last week's attacks on
its facilities and as U.S. crude stockpiles unexpectedly
increased. Tension in the Middle East remained elevated, however. Saudi
Arabia on Wednesday displayed remnants of what it described as
Iranian drones and cruise missiles used in the attack, calling
them "undeniable" evidence of Iranian aggression. Trump ordered
a major increase in sanctions on Iran on Wednesday, following
repeated U.S. assertions that Iran was behind the attack.
U.S. crude oil futures settled down 2.07% at $58.11 per
barrel, while Brent crude oil futures settled at $63.60 per
barrel, a 1.47% decline.
Spot gold reversed early gains after the Fed released its
statement. Spot gold XAU= dropped 0.8% to $1,489.80 an ounce.
Copper CMCU3 lost 0.27% to $5,805.00 a tonne.
Three-month aluminum on the London Metal Exchange CMAL3 %
to $1,792.00 a tonne.
Graphic: World FX rates in 2019 http://tmsnrt.rs/2egbfVh
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