The Dow Jones Industrial Average reached a historic milestone on Wednesday, propelled by the Federal Reserve’s indication of multiple rate cuts in the coming year. This move pleased investors who had been eagerly awaiting the central bank’s acknowledgment of the downward trajectory of inflation and a more moderate monetary policy stance.
Today, the 30-stock Dow surged by 465 points, or 1.2%. At its peak, the Dow soared to 37,057.81, surpassing the 37,000 mark for the first time and eclipsing its previous all-time high from January 2022. Simultaneously, the S&P 500 experienced a 1.2% climb, with banking and real estate stocks spearheading the surge. The Nasdaq Composite also saw a notable gain of 1.1%.
As anticipated, the Federal Reserve maintained the benchmark overnight borrowing rate within the range of 5.25% to 5.5%. However, the pivotal aspect was the Fed’s forecast of three rate cuts in 2024, surpassing their previous indications. These signals were warmly received by investors who have been eagerly awaiting clearer guidance from the central bank regarding potential rate cuts next year, especially in light of recent easing of inflation data.
The Fed’s official statement recognized that inflation had eased modestly over the past year. Additionally, the central bank revised its inflation forecast for 2024, now expecting a rate of 2.4%, down from the previous projection of 2.6%.
Analysts and market experts are optimistic about the Fed’s adjusted stance. Gina Bolvin, President of Bolvin Wealth Management Group, commented, “The Fed has given the market an early holiday gift today when, finally, for the first time, they have commented positively about inflation. It appears that the Fed is moving in the market’s direction, rather than the market moving towards the Fed. The Santa Claus rally may continue.”
Source (CNBC)
