Stocks Soar as Federal Reserve Executes Major Rate Cut

Stock indexes increased and the dollar declined after the Federal Reserve cut interest rates by half a percentage point. This significant move, aiming to recede inflation to 2%, marked the first rate reduction in over four years. The Dow, S&P 500, and Nasdaq all saw notable increases.

Major stock indexes surged while the dollar dipped on Wednesday, reacting to a substantial interest rate cut by the Federal Reserve, which aimed to reduce borrowing costs in the foremost global economy for the first time in over four years.

The U.S. central bank lowered the overnight rate by half a percentage point, greater than the typical quarter-point change. This move, attributed to increased confidence in inflation falling to the 2% annual target, leaves the overnight rate at 4.75%-5.00%. The blue-chip Dow Jones Industrial Average increased 0.36% to 41,755.91, the S&P 500 climbed 0.47% to 5,661.29, and the Nasdaq Composite went up by 0.77% to 17,764.34.

Brian Jacobsen, chief economist at Annex Wealth Management, remarked, 'The Fed ended the pause with a bang. It's a strong signal that they cut by 50 bps and expect another 50 basis points of cuts this year.' Although rates had held their highest levels in over two decades since July 2023, MSCI's index of world stocks achieved a record high, cited up 0.37% at 831.78. The dollar index, measuring the greenback against several currencies, fell 0.54% to 100.36, while the yield on rate-sensitive 2-year U.S. government bonds dropped slightly.

(With inputs from agencies.)