The Dow Jones Industrial Average closed at an all-time high for the first time in nearly two years following a signal from Federal Reserve Chairman Jerome Powell that the Fed would be cutting interest rates in 2024.
On Wednesday, the Dow Jones closed up 512.30 points, or 1.4%, at a record 37,090.24, according to Market Watch. The large boost is being credited to Powell’s recent announcement that he believes the current federal interest rate is at or near its peak, signaling a possible cut in the coming year.
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The S&P 500 and Nasdaq Composite closed with similarly significant raises as well, at 1.37% and 1.38%.
“If the concern was that the Fed would keep rates too tight in real terms for too long, and that would put the economy in recession, those concerns are lower now,” Erik Weisman, chief economist at MFS Investment Management, told Market Watch.
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Interest rates are kept high to combat inflation, but it is also to discourage investors. As the United States has struggled with record inflation over the past couple of years, the Fed has boosted interest rates significantly. As inflation begins to cool, investors hope interest rates will fall in conjunction.
