Dow, S&P 500 close at all-time highs day after Fed delivers big rate cut
Wall Street soared on Thursday with the Dow and S&P 500 closing at all-time highs — a day after the Federal Reserve kicked off its easing cycle with half-a-percentage point reduction and forecast more cuts were on the horizon.
The Dow Jones Industrial Average jumped 522.09 points, or 1.3%, to 42,025.19, smashing its previous record of 41,622.08 on Monday. The blue-chip index had soared mor🥂e than 650 points to an intr🎶aday record of 42,160.91.
The S&P 500 gained 2.5% to close at 5,713.64, and the Nasdaq 🐭leaped more than 400 points, or 2.5%.
Rate-sensitive growth stocks that have led much of this year’s rally rose. Microsoft added 1.8%, Tesla gained 7.4% and Apple advanced 3.7%.
Semiconductor&ꦐnbsp;stocks such as Nvidia rose 4%, while Advanced Micro Devices gained 5.7% and Broadcom added 3.9%, sending the Philadelphia SE Semiconductor Index up 4.3%.
The Russell 2000 index also⛄ rose 2.1% with the broader market, as a lower interest environment could mean lower😼 operating costs and greater profits for credit-dependent companies.
After delivering its super-sized verdict on Wednesday, the Fed forecast rates to fall by another 50 bps by year-end and unveiled macroeconomic projections that analysts say reflect a goldilocks scenario, where growth is steady 𝕴and inflat🍌ion and unemployment stay low.
“Markets are acting well to yesterday’s messaging from the Fed. They wanted to hear we weren’t falling into recession which Chair Powell reassured that the economy is on good footing,” said Bret Kenwell, investment analyst at eToro.
“A soft landing is still in play; that’s still the default expectation. However, there’s still clearly some concern that the labor market is going from a period of softness to weakness.”
Data on the day showed jobless claims for the week ended Sept. 14 stood at 219,000, lower than economists’ estimates of 230,000.
Traders now see 🐈a 57.1🥂% chance that the central bank will lower interest rates by 25 basis points at its November meeting, as per the .
BofA Global Research now ant🎐icipates a total🧜 of 75 bps rate cuts by the end of this year, compared with 50 bps forecast earlier.
Evercore ISI data going back to 1970 showed the S&P 500 has posted an average 14% gain in the six months fo🧔llowing the first reduct🎶ion of a rate-cutting cycle.
September has generally be🅠en a disappointing month for US equities with the S&P 500 notching an averag♑e loss of 1.2% since 1928, but has gained over 1% so far this month.
Charlie Gasparino has his finger on the pulse of where business, politics and finance meet
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The broader banks index trended 2.5% higher, pulled up by big banks such as Citigroup and Bank of America after they lowered thei🔯r respectiveꦉ prime rates.
Among individual movers, fertility benefits management firm Progyny plunged 33% after a significant client notified the company it had elect💖ed to exercise a 90-day option to terminate its services agreement.
