Markets met the news of the Federal Reserve's 25 basis point interest rate cut with a quick rally, followed by an equally quick retreat. 

The Dow Jones Industrial Average jumped 200 points on the news when it was announced at 2pm, but within 15 minutes had fallen by about 130 points. The Nasdaq Composite — which had been down all day — jumped about 75 points before retreating back to where it was. The KBW Bank index, however, rose by roughly 0.75% on the news and has largely retained those gains. 

The Federal Open Market Committee's 25 basis point rate cut was broadly in line with market expectations, though investors may have anticipated more appetite on the committee for a larger 50 basis point cut at the September meeting. Only Stephen Miran, who was sworn in as a Fed governor Tuesday morning, dissented from the majority, favoring a 50bps cut.

The FOMC's summary of economic projections showed nine members of the committee's full membership — including voting and non-voting members of the committee — expect interest rates to reach between 3.5% and 3.75% by the end of the year, suggesting two 25 basis points cut in 2025. But another six members of the committee anticipate rates remaining at between 4% and 4.25 through 2025, while two members expect a single additional 25bps cut this year. One member expected interest rates to rise again to between 4.25 and 4.5%, while another single member expected interest rates to fall to 3% by year-end.