Wall Street got what it wanted on Wednesday — and it helped send the Dow soaring higher.
The Dow gained 497 points, or 1.05%. The S&P 500 gained 0.67% and closed just shy of a record high. The tech-heavy Nasdaq Composite gained 0.33%.
The Federal Reserve cut its benchmark interest rate by a quarter point, matching traders’ expectations.
Stocks moved higher in the afternoon as Fed Chair Jerome Powell outlined how central bankers are assessing the health of the labor market, progress on inflation and the outlook for interest rates.
“I don’t think that a rate hike … is anybody’s base case at this point,” Powell said. “People are writing down their estimates of policy, of where it should go. It is either holding here or cutting a little or cutting more than a little.”
“We are well positioned to wait to see how the economy evolves,” Powell said.
While the Fed’s rate cut is in response to a weakening labor market, stock investors love the prospect of lower rates — and were relieved to hear a potential rate hike is not on the table for early next year.
“No whipsaw from the Powell press conference … so investors can lean more into risk,” Krishna Guha, vice chairman at Evercore ISI, said in a note.
“And he is sounding very upbeat on productivity and growth, including AI effects along with the general step up in productivity in growth in recent years,” Guha said. “The take on productivity and growth is very risk friendly.”
Wall Street’s fear gauge, the VIX, fell 7%, reflecting the sense of calm for now.
