Dow skyrockets to fresh record after Fed’s hints at 3-rate cuts

After the Fed had hinted at three rate cuts in the pipeline for 2024, the Dow surged to new heights. Following the Federal Reserve’s the retention of Fed’s 23-year high rate of interest rate and its hold on the projections for three rate cuts before the end of 2024, the three major averages surged to all-time closing records on Wednesday.

Stocks Celebrate Fed’s Decision

The Dow Jones Industrial Average closed at 39,512.13, up 401.37 points, or 1.03%, while the S&P 500 closed at 5,224.62, up 0.89% and breaking through the 5,200 barrier for the first time ever. At 16,369.41, the Nasdaq Composite finished 1.25% higher.

The Fed maintained its December prediction and predicted that it will continue to drop rates three times before this year is over. Nevertheless, the central bank stated that before releasing the brakes, it needed more proof that inflation is decreasing.

The US central bank stated in a statement that “the Committee does not expect it will be appropriate to reduce the target range until it has gained greater confidence that inflation is moving sustainably towards 2 percent.”

Some investors had been concerned that a recent flurry of hot inflation reports might lead to even fewer cuts than the markets had projected prior to the FOMC meeting.

This year, there were some fluctuations in US inflation, but Jerome Powell seems unfazed. The fact that three cuts remain in the dot plot, bolstering markets and risk appetite, is a relief to investors. The punchbowl isn’t going away just soon, even though the Fed might wake up with a hangover.

Following the Fed’s announcement, financial equities increased in the expectation that this year’s rate reduction would sustain economic growth. While the SPDR S&P Regional Banking ETF rose more than 3%, American Express added 2.8%.

The Megacap technology firms that drove the last market surge surged as investors wagered that the industry would benefit most from lower interest rates. While Meta Platforms gained 1.9%, Alphabet, Amazon, Microsoft, and Nvidia all had gains of roughly 1%. Apple and Tesla, two recent market laggards, increased by 1.5% and 2.5%, respectively.

Chipotle Mexican Grill saw a 3.5% increase. After news mentioned that Apollo Global Management had made a $11 billion bid for Paramount Global’s film and television studio, the company’s stock shot up 11.8%.