Dow Reaches New Record After Fed Rate Cut, Posts Winning Week

The Dow Jones Industrial Average closed at a new record on Friday, capping off a significant rally following the Federal Reserve’s first major interest rate cut in four years. The 30-stock Dow edged up 38.17 points (0.09%) to close at 42,063.36, marking a fresh high. However, the S&P 500 dipped slightly by 0.19% to 5,702.55, while the Nasdaq Composite fell 0.36% to end at 17,948.32. Earlier in the week, the Dow surpassed 42,000, and the S&P 500 crossed the 5,700 threshold for the first time.

All three major indexes recorded weekly gains, with the S&P 500 rising 1.36%, marking its fifth positive week in six weeks. For the year, the index is up over 19%. The Dow saw a weekly increase of 1.62%, and the Nasdaq gained 1.49%.

The market surged following the Federal Reserve’s decision on Wednesday to slash interest rates by a half percentage point, its first reduction since 2020. While the immediate market reaction was muted, Thursday saw stocks rally, particularly in tech, with Nvidia and Home Depot benefitting from expectations of lower borrowing costs.

Federal Reserve Governor Christopher Waller commented on Friday, noting that inflation is falling more quickly than anticipated, supporting his decision to back the half-point rate cut. Mark Hackett, Nationwide’s chief of investment research, stated, “Investors viewed the aggressive rate cut as a positive catalyst,” adding that the Fed has effectively assured markets that this cut was a proactive step to sustain economic momentum rather than a reaction to faltering conditions.

However, sentiment was dampened slightly by FedEx’s reduced earnings outlook, which caused its shares to drop over 15%. Competitor UPS also declined by 2.7% in sympathy.