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After the US Federal Reserve’s first rate cut in four years, major Wall Street indexes scaled to its all time highs on Thursday as the global market welcomed the move.
The benchmark S&P 500 jumped 1.7% to close at its first record high since July at 5,713.64 points. The Dow Jones Industrial Average also climbed 1.3% to 42,025.19 points to hit a new record. Nasdaq Composite, which is majorly focused on the technology sector, shot up by 2.5% to 18,013.98 points.
As the Federal Reserve announced its decision for a 50 basis points rate cut to reduce the rates from its two decades high, the Wall Street indexes plunged to settle on the lower side on Wednesday. But as soon as the global market rejoiced with the announcement, America’s leading share indices bounced back.
The S&P 500 has risen more than 20% since the start of 2024. The Nasdaq is up by more than 22% in the same time period, while the Dow Jones Industrial Average has shot up 11% this year.
Jonathan Cohn, Head of US Rates Desk Strategy at Nomura said, “The jumbo cut appears to have raised the perceived likelihood of a soft landing,” according to Reuters. Cohn further added, “The market will continue to acclimate to the Fed’s mixed messaging through tomorrow’s light calendar.”
Inflation is continuing to fade in the US and policy makers in the Federal Reserve believe that further rate cuts are possible in 2024 by an additional 50 basis points, according to The Guardian report.
Federal Reserve’s Chair Jerome Powell told reporters, “I don’t see anything in the economy that suggests the likelihood of a downturn is elevated. I don’t see that.”
