Market Rally Continues: Fed Cuts Interest Rates, Boosting Investor Confidence
Post-Election Optimism Fuels Stock Market Growth
The US stock market surged on Thursday, extending its post-election rally as the Federal Reserve announced a 25-basis-point interest rate cut. This move, although smaller than the September cut, signals the central bank’s continued focus on inflation control. The Nasdaq Composite index reached a new record high, jumping 1.5%, while the S&P 500 climbed 0.8% to a new record.
Fed’s Stance on Inflation and Employment
Despite sticky Consumer Price Index (CPI) data, which remains above the Fed’s 2% target, Chair Jerome Powell expressed confidence in the inflation outlook. Analysts at Goldman Sachs noted that the removal of language indicating “further progress” in inflation control merely reflects the ongoing rate-cutting cycle. Meanwhile, the labor market appears to be less of a concern for the Fed, with Powell stating that the central bank is prepared to adjust its easing pace as jobs data evolves.
Investors React to Election Outcome
The election results seem to have boosted investor confidence, with hopes that President Trump’s light regulatory stance and proposals for corporate tax cuts will create a more business-friendly environment. Evercore ISI predicts an 11% jump in the S&P 500 by next summer, citing the rally’s expected acceleration in Trump’s second term. However, Powell emphasized that the election outcome will have no impact on the Fed’s policy in the near future.
Market Snapshot
As of Thursday’s closing bell, major indexes stood at:
- S&P 500: 5,973.10, up 0.74%
- Dow Jones Industrial Average: 43,729.34
- Nasdaq Composite: 19,269.46, up 1.5%
Commodities, Bonds, and Crypto
Oil futures rose, with West Texas Intermediate crude increasing 0.5% to $72.06 a barrel and Brent crude climbing 0.7% to $75.42 a barrel. Gold prices jumped 1.4% to $2,713.80 an ounce. The 10-year Treasury yield fell nine basis points to 4.335%, while Bitcoin saw a slight increase to $76,505.
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