The Dow Jones Industrial Average and other indexes fell sharply after the Federal Open Market Committee announced a quarter-percentage point cut in interest rates Wednesday afternoon and just two more rate cuts in 2025, lower than previously forecast. In its final interest rate decision of the year, the Fed made its third straight rate cut, cutting interest rates to a range of 4.25% to 4.5%.

“Since the beginning of the year, labor market conditions have generally eased and the unemployment rate has increased but remains low,” the FOMC said in a statement. “Inflation has made progress toward the committee’s 2 percent target but remains somewhat elevated.”

According to its updated summary of economic forecasts, the central bank said it could only make two more quarter-point cuts to the key interest rate in 2025.

Fed Chairman Jerome Powell also signaled that the Fed would take a more “cautious” approach to monetary policy next year.

“In terms of further cuts, we expect further progress on inflation as well as continued strength in the labor market,” Powell said in a news conference on Wednesday. “And as long as the labor market is sound, we can be cautious about further cuts.”

Powell said the decision to cut rates was a “narrower decision” than previous cuts, but that the FOMC ultimately decided it was “the right decision” to balance inflation and labor market goals.

Shortly before the market closed, the Dow was down 811 points, or 1.8%. The Dow is on a 10-day losing streak, its longest since 1978. The S&P 500 and the tech-heavy Nasdaq lost 2.4% and 3.3%, respectively.

Additionally, Micron Technology (MU) will report its quarterly results after the closing bell. Nvidia stock (NVDA), which fell earlier this week, rebounded in the morning, rising 3% to $134 per share.

—Rocio Fabbro contributed to the article

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