U.S. Stocks Surge as Federal Reserve Slashes Interest Rates

U.S. stocks surged on Wednesday after the Federal Reserve cut interest rates by 50 basis points, marking its first cut in over four years. The decision was driven by confidence that inflation is moving towards the Fed's 2% target, aiming to sustain the healthy labor market.

U.S. stocks surged on Wednesday as the Federal Reserve made a significant move by cutting interest rates by 50 basis points, the high end of estimates, for the first time in more than four years. The central bank indicated a greater confidence that inflation is nearing its 2% target.

The Fed's decision to slash rates by half a percentage point underscores its focus on maintaining a robust labor market. 'The Fed ended the pause with a bang,' said Brian Jacobsen, chief economist at Annex Wealth Management. He added that the Fed expects another 50 basis points of cuts this year.

Market dynamics had been volatile, with expectations for the rate cut size fluctuating significantly in recent days. Borrowing costs had remained at high levels since July 2023, but the latest move boosted market confidence, pushing major indexes to new record highs driven by prospects of lower interest rates.

(With inputs from agencies.)