Dow leaps 522 points in a rate-cut rally that swept the world
Wall Street romped to records Thursday as a delayed jubilation swept markets worldwide following the Fed eral Reserve’s big cut to interest rates.
Wall Street’s gains followed rallies for markets across Europe and Asia after the Federal Reserve delivered the first cut to interest rates in more than four years late on Wednesday. Some analysts said the market could be relieved that the Fed’s Powell was able to thread the needle in his press conference and suggest the deeper-than-usual cut was just a “recalibration” of policy and not an urgent move it had to take to prevent a recession.
Some investment banks raised their forecasts for how much the Federal Reserve will ultimately cut interest rates, anticipating even deeper reductions than Fed officials. Forecasts released Wednesday show Fed officials expect to cut interest rates by another half of a percentage point in 2024 and another full point in 2025. The federal funds rate is currently sitting in a range of 4.75% to 5%.
The upcoming U.S. presidential election could also keep uncertainty reigning in the market. A fear is that both the Democrats and Republicans could push for policies that add to the U.S. government’s debt, which could keep upward pressure on interest rates regardless of the Fed’s moves.
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