Dow, S&P 500 close at record high after Fed interest rate cut
Stock Market Soars to Record Highs After Fed Rate Cut
Tonight, the stock market is coming off a big boom day, with record highs across the board. The Dow, S&P, and NASDAQ all saw significant gains, with the NASDAQ beating all-time highs. The Dow and S&P were up at least 2.5%, a remarkable feat considering the uncertainty surrounding the Federal Reserve’s decision to cut interest rates by half a percent.
Experts Weigh In
CNBC’s Mike Santo, reporting live from the floor of the New York Stock Exchange, believes that the half-point rate cut was a surprise to many, but ultimately a positive move for the markets. "I think it starts with the data preceding the Fed decision, where the case was built by well-connected reporters, former Fed officials, and Wall Street economists for a half-point cut," Santo explained. "The good economic data in recent days, including retail sales and weekly unemployment claims, also contributed to the idea that the Fed was taking a prudent first step towards a more normal level of interest rates."
What Does it Mean for Your Portfolio?
While it’s impossible to predict the future with certainty, Santo notes that history suggests that if there is no recession within the next six months after a Fed rate cut, stocks tend to continue to do well. "The Fed officials’ actual outlook yesterday was for maybe unemployment to inch higher from here and then stabilize," Santo said. "If that comes to pass, essentially this was more of an insurance cut, and there will likely be more to come, probably smaller ones down the road."
The Impact on the Presidential Election
The timing of the rate cut, just six weeks before the presidential election, is significant. The economy is the number one issue for many voters, along with immigration. As the election approaches, the Fed’s decision will likely be closely scrutinized by politicians and the public alike. "It’s a big deal for anyone, because it could pave the way for lower interest rates on everything from new car loans to new mortgages to your credit card bill," Santo noted.
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