Stocks add to gains, yields extend declines as Fed cuts rates 

By Caroline Valetkevitch

NEW YORK, Dec 10 (Reuters) - Major stock indexes added to gains while U.S. Treasury yields extended declines on Wednesday after the Federal Reserve cut interest rates and signalled it will likely pause further reductions in borrowing costs.

The U.S. dollar stayed lower. Projections issued after the U.S. central bank's two-day meeting showed the median policymaker sees just one quarter-percentage-point cut in 2026, the same outlook as in September. 

However, policymakers have been weighing signs of a cooling labor market against concerns about inflation risks. 

Complicating matters further is the lack of data due to the recent long U.S. government shutdown, which is going to delay the all-important November payrolls report to December 16, while inflation figures are due two days later.

"The 25 basis-point rate cut was widely expected and the economic projections remain optimistic. I would view this as a semi-dovish, cautious statement," said Peter Cardillo, chief market economist at Spartan Capital Securities in New York.

In comments following the announcement, Fed Chair Jerome Powell said the U.S. central bank interest rate policy is well positioned to respond to what lies ahead for the economy, but he declined to provide guidance on whether another interest rate cut lies in the near future.

The Dow Jones Industrial Average rose 550.13 points, or 1.16%, to 48,112.12, the S&P 500 rose 50.67 points, or 0.74%, to 6,891.18 and the Nasdaq Composite rose 102.47 points, or 0.43%, to 23,678.63.

MSCI's gauge of stocks across the globe rose 2.00 points, or 0.20%, to 1,008.44. Earlier, the pan-European STOXX 600 index ended 0.07% higher.

The Fed's move was widely anticipated by market participants. The decision to cut by 25 basis points drew three dissents.

The dollar remained down against major currencies. The dollar index, which measures the greenback against a basket of currencies including the yen and the euro, fell 0.23% to 98.99, with the euro up 0.26% at $1.1655. Against the Japanese yen, the dollar weakened 0.17% to 156.6.

U.S. Treasury yields extended declines. The yield on benchmark U.S. 10-year notes fell 4.1 basis points to 4.145%, from 4.186% late on Tuesday.

Yields around the globe have been climbing in recent weeks, as many central banks have signalled they are either at or near the end of their own easing cycles, while the Bank of Japan is widely anticipated to hike rates at its policy meeting next week.

(Reporting by Caroline Valetkevitch in New York, with additional reporting by Amanda Cooper in London, Stephen Culp in New York and Wayne Cole in Sydney; Editing by Mark Potter and Matthew Lewis)