US stocks rebound after Fed decision…and S&P 500 hits record high
U.S. stocks cheered the Federal Reserve's (expected) decision to keep interest rates on hold, the bank announced its continuation of three rate cuts this year, its major indexes rose about 1%, and the S&P 500 index hit its all-time high. Always levels.
By the end of trading on Wednesday, the Dow Jones Industrial Average had added more than 400 points to its value, representing an increase of more than 1%. The Nasdaq index, heavily weighed down by interest rate expectations, also rose 1.25%. The S&P index rose just 0.89%, enough to post a new record close.
U.S. stocks rose strongly after the Federal Reserve signaled in its report that it will cut interest rates three times this year, despite signs of rising inflation, despite quiet trade ahead of the announcement of the Federal Reserve's decision. Again in February.
On Wednesday, the Federal Reserve kept interest rates at an expected range of 5.25% – 5.50%. AndThe Federal Open Market Committee, which sets interest rates for the world's biggest central bank, said it had not abandoned plans to initiate new cyclical rate cuts, the first since the Covid pandemic cuts in March 2020.
Federal Reserve Chairman Jerome Powell has indicated that the bank has had great success in reducing the rate of inflation, but that the path is not set for his and his team's efforts to reach the 2% target. .
“The Committee does not expect it to be appropriate to lower the target range for interest rates until there is greater confidence that inflation is moving steadily towards its target level,” the central bank said.
Ahead of the meeting, Wall Street saw cautious trading, fearing that recent tepid inflation reports would reduce the number of rate cuts markets had expected.
“We've seen some inflationary bumps this year, but Jerome Powell hasn't budged so far,” said David Russell, global head of market strategy at TradeStation. The markets provided support and increased risk appetite.”
Shares of major technology companies led the market higher on Wednesday, with investors betting that they will be the biggest beneficiaries of low interest rates. Amazon shares rose 1.28%, Alphabet (Google) 1.16%, Microsoft 0.91%, Apple 1.47%, Nvidia 1.9%, Meta (Facebook) shares 1.9% higher.
Gold rose more than 1% on Wednesday after the Federal Reserve indicated it expects to cut interest rates by 75 basis points by the end of 2024, undercutting the dollar and Treasury yields.
Spot gold was up 1.2% at $2,183.02 an ounce by 19:23 GMT, while US gold futures were up 0.1% at $2,161. Low interest rates reduce the opportunity cost of owning the yellow metal, which does not generate income, which increases its demand and raises its price.
The dollar fell after hitting its highest level in more than two weeks in the previous session. A strong dollar makes gold more expensive for holders of other currencies.
Gold prices fell nearly 1% last week, after February macroeconomic data indicated inflation continued to rise, dampening hopes of a rate cut.
In other precious metals, silver rose 2.6% to $25.56 an ounce in spot transactions, platinum rose 1.7% to $909.35 and palladium rose 3.1% to $1,022.50.
