The Federal Reserve’s announcement of multiple rate cuts in 2024 sent U.S. stock futures climbing on Wednesday night, and the Dow Jones Industrial Average closed at an all-time high.
Futures tied to the 30-stock Dow added 90 points, or 0.2%, while S&P 500 futures and Nasdaq 100 futures gained 0.3% and 0.4%, respectively.
The Federal Open Market Committee kept interest rates unchanged in a range between 5.25% and 5.5%, in line with Wall Street’s expectations. The market was further buoyed after policymakers penciled in three rate cuts next year.
In regular trading, the Dow jumped by 1.4% during the main trading session to close at 37,090.24. This was the first time the 30-stock index closed above 37,000 and broke its previous closing high from January 2022. The S&P 500 added 1.37%, finishing above 4,700 for the first time since January 2022, and the Nasdaq Composite gained 1.38%. All three major averages rose to new 52-week highs.
The central bank’s commentary was well received by investors, with Ross Mayfield, investment strategy analyst at Baird, describing it as a “tip of the cap to the fact that we’re on a path to a soft landing — and maybe they will be able to ease policy more than the market expects in 2024.”
Mayfield believes that the market rally from over the past six weeks and following Powell’s comments is now “warranted,” although he also pointed out that “risks are skewed a little bit to the downside in 2024, but a soft landing is certainly in the cards and the Fed’s acknowledgement today does help justify the move in equities.”
In extended trading Wednesday, shares of Adobe declined by more than 4% following muted guidance for 2024 earnings and revenue. Investors will be keeping an eye on economic data on Thursday, including weekly jobless claims, November’s retail sales and imports data, as well as October’s business inventories report.