CNBC Daily Open: Markets need time to digest the 50-point cut

A jumbo-sized 50-point cut 
The U.S. Federal Reserve slashed rates by half a percentage point, bringing the federal funds rate to 4.75%–5%. Federal Open Market Committee members see the rate falling to 4.25%–4.5% by the end of this year, meaning another half-point cut before 2025. Members also raised their estimation of the unemployment rate this year to 4.4% from the 4% projected in June. 

Rate cut didn't boost markets 
U.S. markets popped on the Fed's 50-point cut but couldn't maintain their gains. On Wednesday, the S&P lost 0.29%, the Dow fell 0.25% and the Nasdaq dipped 0.31%. Asia-Pacific markets, however, traded higher Thursday. Hong Kong's Hang Seng index climbed around 1.8% as the city lowered its interest rate by

Presidential prediction 
U.S. Vice President Kamala Harris is more likely to win the presidential election than former President Donald Trump, according to a CNBC survey. Out of the 27 respondents, who comprise investment strategists, economists and fund managers, 48% think Harris has a greater chance of winning, 41% think it's Trump, while 11% are unsure. 

Treading the middle path 
Bridgewater Associates Founder Ray Dalio told CNBC the upcoming U.S. presidential election would be "the most consequential election of [his] lifetime," and "neither [candidate] is what the country needs." Separately, Dalio said the economy "is in relative equilibrium," but the Fed must do a "balancing act" of keeping interest rates neither too high nor low. 

[PRO] Best-performing stocks after a cut 
The Fed's half-point cut is likely to lower yields on Treasurys, which would prompt investors chasing returns to rotate into riskier assets like equities. But some stocks are more rate-sensitive than others. CNBC Pro screened stocks to find the top-10 names set to gain the most following a rate cut. 

The futures market was right.  

Just before the Fed meeting, it was pricing in a 64% chance of a 50-basis-points cut, according to the CME FedWatch tool. By contrast, the prevailing sentiment among experts was that a 25-point cut was more likely, according to a CNBC survey. 

Such predictions can be seen as a wholly disinterested affair. That is, the forecast is based on an objective consideration of the state of the economy, balanced against the risk of inflation. 

Those predictions can also express hope, which can embody a desire without having evidence to back it up.  

And when that hope is fulfilled, markets can have a moment of panic. 

After touching record highs as the Fed's jumbo-sized cut was announced, the S&P 500 and Dow Jones Industrial Average ended the day in the red. So did the Nasdaq Composite.  

It's difficult to understand what happened there, since markets are so driven by sentiment that sometimes defy explanation or evidence. 

That might have been at the back of Fed Chair Jerome Powell's head. And he was likely aware that a bigger-than-usual cut might connote that the Fed's worried about the economy.  

So, Powell spent a big portion of the post-meeting press conference massaging sentiment. 

"I don't see anything in the economy right now that suggests that the likelihood of a recession, sorry, of a downturn, is elevated," Powell said.  

Why, then, did the Fed decide not to leave cuts at 25 basis points? 

As if anticipating worries, Powell said in his opening statement that the decision marked a "recalibration" of policy. In other words, the Fed's jumbo cut is a sign the central bank is taking the lead in charting monetary policy, and not reacting belatedly to economic conditions. 

Investors will take some time to digest Powell's assurances. Markets, after all, are largely irrational creatures, and will react instinctively at first instance of any big news.  

– CNBC's Jeff Cox, Yun Li, Hakyung Kim and Samantha Subin contributed to this story.