LIVE MARKETS-Stocks gain, yields little changed after Fed's hawkish cut

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STOCKS GAIN, YIELDS LITTLE CHANGED AFTER FED’S HAWKISH CUT

Stocks gained and Treasury yields were little changed on Wednesday after the Federal Reserve cut rates by 25 basis points, as was widely expected, and signaled it will likely pause further reductions.

The U.S. central bank looks set to pause cuts as officials look for clearer signals about the direction of the job market and inflation that "remains somewhat elevated."

“The tone reflected a committee struggling to balance weakening economic indicators with a desire to avoid over-easing before inflation is fully anchored,” Daniela Hathorn, senior market analyst at Capital.com said in a note.

The Dow Jones Industrial Average .DJI is the best performing index, followed by the S&P 500 .SPX. The Nasdaq Composite .IXIC is modestly red but pared losses after the Fed statement. Industrials lead S&P subsectors, while communications services lag.

The moves were largely muted as traders had already largely priced in Wednesday’s decision. Fed fund futures traders now see a further cut as likely in April, though it is not fully priced in until June.

Three Fed policymakers dissented to the cut, with Chicago Fed President Austan Goolsbee joining Kansas City Fed President Jeffrey Schmid in arguing the policy rate should be left unchanged, and Fed Governor Stephen Miran again advocating a larger half-percentage-point reduction.

"The divisions on the FOMC aren’t as deep as feared,” said Brian Jacobsen, chief economist at Annex Wealth Management in Menomonee Falls, Wisconsin.

(Karen Brettell, Chuck Mikolajczak)

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