Adrenaline rush swept across all corners of the stock market. The US central bank hinted at three rate cuts in 2024, prompting Wall Street to throw a "We're very back" party.
On Wednesday, the Federal Reserve maintained its key interest rate for the third consecutive time. With the inflation rate decreasing and the economy holding steady, Federal Open Market Committee policymakers unanimously voted to keep the benchmark overnight borrowing rate within a targeted range of 5.25%-5.5%. Alongside the decision to maintain the status quo, committee members laid the groundwork for at least three upcoming cuts in 2024.
Following the Federal Reserve’s final policy decision, US markets soared higher on Wednesday afternoon. Following the Federal Reserve's final policy decision, US markets surged higher on Wednesday afternoon. The Dow Jones Industrial Average skyrocketed, setting a new all-time record. The 30-stock index increased by 1.4%, closing at 37,090 and surpassing its previous record high of 36,799, achieved nearly two years ago.
The S&P 500 and the Nasdaq also experienced gains as Wall Street celebrated the US central bank's announcement.
This news has swelled up the stock market, prompting traders to seek out the day's hottest stocks. Investors naturally gravitated towards Apple, propelling its shares to a record close of $197.96 each.
Apple stock upward swing occurred despite four consecutive quarters of declining revenue and sales challenges in China. The Tim Cook-led giant has added over $1 trillion to its market cap this year, reaching a valuation of $3.09 trillion.
The three rate cuts suggested for the next year are slightly less than what the markets had anticipated but more than what the Fed had previously indicated. Markets are currently pricing in the likelihood of rate cuts starting by May, although some economists believe it could happen sooner. The debate revolves around whether the Fed is compelled to cut rates due to a deteriorating economy or if inflation is consistently heading toward the Fed's 2% annual target.
According to the Fed's preferred metric, inflation is projected to end 2023 at 2.8%, down from 3.3% in September. It is expected to reach 2.4% in 2024, 2.1% in 2025, and 2% in 2026.
