Dow Surges To Record High Following Dovish Fed Announcement

Stocks turned in a lackluster performance throughout much of the trading session on Wednesday before skyrocketing in reaction to the Federal Reserve’s monetary policy announcement.

With the late-day rally, the Dow soared to a record closing high, while the Nasdaq and the S&P 500 reached their best closing levels in almost two years.

The Dow saw further upside going into the close, spiking 512.30 points or 1.4 percent on the day to 37,090.24. The Nasdaq shot up 200.57 points or 1.4 percent to 14,733.96 and the S&P 500 jumped 63.39 points or 1.4 percent to 4,707.09.

The surge on Wall Street came after the Fed announced its widely expected decision to leave interest rates unchanged while also confirming plans to pivot to cutting rates next year.

In support of its dual goals of maximum employment and inflation at the rate of 2 percent over the longer run, the Fed said it decided to maintain the target range for the federal funds rate at 5.25 to 5.50 percent.

The accompanying statement said the decision came as economic growth has slowed from its strong pace in the third quarter, while inflation has eased over the past year.

The projections provided by the Fed also suggest the central bank will begin cutting rates next year, with the median forecast indicating rates will be lowered to 4.6 percent by the end of 2024.

The median forecast points to rates in a range of 4.50 to 4.75 percent, hinting the Fed plans to cut rates by 25 basis points three times next year.

Following the September meeting, the Fed had forecast raising rates by another 25 basis points this year before lowering rates to a range of 5.0 to 5.25 percent by the end of 2024.

“Additional rate hikes no longer appear to be part of the conversation,” said Mortgage Bankers Association SVP and Chief Economist Mike Fratantoni. “It is all about the pace of cuts from here.”

During his post-meeting press conference, Fed Chair Jerome Powell acknowledged that rate cuts will be a “topic of discussion” at upcoming…