On Wednesday, the US Federal Reserve cut its interest rate by 0.5%, marking the biggest rate cut in the last four years. This decision’s ripple effect was seen worldwide as the Asian market also witnessed a surge. Similarly, the rate cuts have also affected the US stock market. Wall Street reached its all-time high after the rate cut was announced, as the decision was received so well by the world.
Three of the US’ biggest indexes, S&P500, Dow Jones Industrial Average and Nasdaq composite, all saw a surge in their points. All three indexes saw a rise of 1.7% to 5713.64 points, 1.3% to 42025.19 and 2.5% to 18013.98, respectively. This marked a new all-time high for the Dow Jones index and a new high for the S&P 500 since July.
The head of US Rates desk strategy at Nomura, Jonathan Cohn shared his views on the development and said, “The jumbo cut appears to have raised the perceived likelihood of a soft landing. The market will continue to acclimate to the Fed’s mixed messaging through tomorrow’s light calendar.”
This rate cut market marks the first time in four years that the Fed has lowered rates. Previously, the Fed only did a quarter point rate cut. This was absolutely necessary as inflation was climbing up, affecting various job sectors and pulling the economy down.
