Stocks Soar to Unprecedented Levels Following Fed’s Rate Decision
US stock indexes reached record highs on Wednesday after the Federal Reserve opted to keep interest rates steady and reaffirmed its forecast of three rate cuts for the year ahead.
The S&P 500 (^GSPC) climbed 0.8%, closing above 5,200 for the first time at 5,224.62. Similarly, the Dow Jones Industrial Average (^DJI) rose about 1% to a record close of 39,512. The Nasdaq Composite (^IXIC), dominated by tech stocks, led the gains with a more than 1% increase, ending the day at a new peak of 16,369.
All three major indices bounced back from slight declines before the Fed’s decision.
In addition to its policy statement, the Fed released updated economic projections in its Summary of Economic Projections (SEP), including its “dot plot” illustrating policymakers’ anticipated future interest rate paths.
Fed officials foresee the fed funds rate dropping to 4.6% by the end of 2024, indicating a potential 0.75% reduction this year, consistent with market expectations.
Bond markets saw limited movement in response, with yields on the 10-year Treasury (^TNX) edging slightly lower to around 4.28% following a notable increase over the past two weeks.
Overall, the market’s reaction to the Fed meeting highlighted a broadening participation in the market rally, as evidenced by the nearly 2% surge in the small-cap benchmark index (^RUT) and gains of over 1% in six of the 11 S&P 500 sectors.
