Dow Jones Hits Record High as Federal Reserve Hints at Three Rate Cuts in 2024

US Stock Market Hits Record High on Federal Reserve’s Dovish Signals.
On Wednesday, the US stock market witnessed a remarkable surge, with the Dow Jones Industrial Average reaching a new all-time high following indications of a more accommodative stance from the Federal Reserve.
The Dow soared to an intraday peak of 37,094.85, breaking the previous record set on January 4, 2022, closing at 36,799.65.
While the Fed decided to maintain the current interest rates, their updated projections suggested a potential 75 basis points cut in rates throughout 2024, exceeding previous expectations.
This announcement led to a considerable drop in bond yields, notably the 10-year US Treasury yield, which plummeted by over 17 basis points to 4.03%.
Fed Chair Jerome Powell adopted a cautious tone, acknowledging persistent high inflation levels and the uncertainty surrounding efforts to curb it. However, market expectations swiftly shifted, anticipating a rate cut in early 2024. Investors now reflect a 92% likelihood of at least one rate cut in the first quarter of the upcoming year, significantly higher than the 34% chance projected a month earlier.
Despite this optimism, Seema Shah, Principal Asset Management’s chief global strategist, suggested that while a few rate cuts might be justifiable if economic growth slows and inflation retreats, the anticipation of five rate cuts seems overly optimistic. Shah emphasized the need for a more substantial economic stumble and a significant shift in Fed policy for such drastic rate cuts.
The market’s reaction reflected optimism based on the Fed’s signals, but some analysts caution against overly ambitious expectations, emphasizing the need for clearer economic indicators to justify such significant rate adjustments.

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