Fed Rate Cut Propels U.S. Markets to Record Highs: Nasdaq Soars 1.5%

U.S. Markets Rally as Fed Cuts Rates, Indexes Hit New Highs

U.S. stock markets continued their post-election rally on Thursday, with major indexes reaching new record highs following the Federal Reserve’s decision to cut interest rates. The central bank reduced rates by 25 basis points, a more modest adjustment compared to its previous meeting in September.

The Nasdaq Composite led the charge, surging 1.5% to close at 19,269.46, while the S&P 500 climbed 0.8% to 5,973.10. The Dow Jones Industrial Average remained relatively flat after significant gains the previous day, settling at 43,729.34.

Federal Reserve Chair Jerome Powell emphasized the bank’s data-dependent approach and readiness to adjust monetary policy as needed. Analysts noted a shift in the Fed’s language regarding inflation, indicating progress rather than further progress towards its 2% target.

Recent Consumer Price Index (CPI) data has shown slower cooling than expected, prompting increased focus on inflation from the central bank. The labor market, while less of a concern, remains under close observation, with the Fed prepared to adjust its easing strategy based on evolving job data.

Investor sentiment remains optimistic, buoyed by expectations of a more favorable regulatory environment and potential corporate tax cuts under the new administration. Evercore ISI predicts an 11% rise in the S&P 500 by next summer.

In commodities, oil futures saw modest gains, with West Texas Intermediate crude up 0.5% and Brent crude rising 0.7%. Gold prices increased by 1.4%, while the 10-year Treasury yield fell by nine basis points.

The cryptocurrency market also saw movement, with Bitcoin experiencing a slight increase to reach $76,505.

As markets digest the implications of both the election results and the Fed’s latest move, investors and analysts alike will be closely monitoring economic indicators for signs of continued growth and stability in the coming months.