ADP report reveals unexpected job losses, intensified by the ongoing government shutdown and delayed BLS data.
The 25-basis-point reduction aims to bolster a cooling economy amid slower job growth and easing inflation.
Citing a weakening labor market, the central bank lowered its benchmark rate by 25 basis points to a target range of 4.0% to 4.25%.
The July Core PCE Price Index rose to 2.9% annually, matching consensus forecasts but doing little to move the needle on a September rate cut.
Upward revision from the Bureau of Economic Analysis was driven by stronger business investment and consumer spending.
Markets dip as the move raises questions over the central bank's independence amid White House pressure for rate cuts.
Solar, housing, and travel stocks lead market gains after Fed Chair signals a dovish shift, boosting investor optimism.
Fed Chair Powell warns of 'rising downside risks to employment' as data points to a weakening labor market.