The Federal Reserve on Wednesday cut interest rates by another 50 basis points and signalled that the door was open to further reductions in an aggressive move to combat the risk of a US recession.

The move to cut rates to 3 per cent initially triggered a broad rally in stocks – the S&P 500 jumped 1.7 per cent in the first 45 minutes after the announcement – only for the market to turn lower just before the closing bell.