TORONTO -- The Federal Reserve's first interest rate cut in a decade sent North American stock markets lower Wednesday as investors expressed disappointment that further cuts aren't guaranteed.

The U.S. central bank cut its rate by 0.25 per cent and chairman Jerome Powell referred to it as a "a mid-cycle adjustment" which suggests that it won't necessarily make further cuts.

Markets have risen on hope that a weakened economy and a trade war with China would prompt the Fed to make several rate cuts through the end of 2020.

"I think this disappointment is short-lived because I really believe that if the market anticipated two or three rate cuts this year I think they were fooling themselves," says Allen Small, senior investment adviser at HollisWealth.

The S&P/TSX composite index closed down 59.49 points at 16,406.56 after hitting an intraday low of 16,282.12.

In New York, the Dow Jones industrial average was down 333.75 points at 26,864.27 for its largest daily drop since May. The S&P 500 index was down 32.80 points at 2,980.38, while the Nasdaq composite was down 98.19 points at 8,175.42.

Eight of the 11 major sectors of the TSX were lower, led by materials. It dropped 2.6 per cent as shares of several metals producers fell on lower prices, including First Majestic Silver Corp. Kinross Gold Corp. and Barrick Gold Corp.

The December gold contract was down $4.00 at US$1,437.80 an ounce and the September copper contract was down 1.25 cents at US$2.67 a pound.

Energy gained 1.2 per cent as Encana Corp. shares rose 4.9 per cent after the Calgary-based company swung to a US$446-million profit in the second quarter and said it remains on track to meet its production and capital investment plan for 2019 while reducing costs more than previously projected.

The September crude contract was up 53 cents at US$58.58 per barrel as U.S. crude inventories fell by 8.5 million barrels for the week and the September natural gas contract was up 9.6 cents to US$2.23 per mmBTU.

The Canadian dollar traded at an average of 76.06 cents US, compared with Tuesday's average of 75.94 cents US.

While stock markets ended the day lower, they were up for a second-consecutive month in July.

Small said he doesn't believe the U.S. rate cut will prompt any action by the Bank of Canada. He also doesn't see how it will affect spending plans by corporations, which posted stronger-than-expected quarterly earnings.

U.S. trade talks with China ended Wednesday without a deal and will resume in early September.

The Fed action and failure to end the trade war has left investors uncertain about the future direction of markets, Small said.

"The market I think is going to struggle to find a catalyst going forward."