There’s good news for your 401(k): stocks are surging, with the Dow Jones Industrial Average pushing deeper into record territory on Thursday, a day after the Federal Reserve said interest rates may go down in 2024.
The Dow closed at a record high of 37,090.24 on Wednesday, up 1.4% from the previous day. The S&P 500 and Nasdaq composite also climbed 1.4%, with the S&P 500 benchmark nearing its own record high. The indices continued to see gains Thursday morning.
The stock market rally came after the Fed signaled it’s probably done hiking rates and is forecasting three cuts next year.
Wall Street loves lower interest rates because they can relax the pressure on the economy and goose prices for all kinds of investments, from stocks to bonds to cryptocurrencies. Markets have been rallying since October on rising hopes that cuts may be on the way.
“Seasonal optimism sort of ignited the advance in all equity markets,” said Sam Stovall, chief investment strategist at investment research and analytics firm CFRA Research. “And with the Dow being closest to its all-time high, today’s Fed notes and press conference – which I believe ended up being more dovish than the market had been anticipating – actually offered a confirmation that investors were on the right track.”
What’s the US stock market doing today?
Stocks continued to climb Thursday morning. As of 11:08 a.m. ET, the Dow was up 0.29% and the Nasdaq composite gained 0.24%. The S&P 500 rose 0.35% at 4,723.61, nearing its previous record high close of 4,796.56 from January 2022.
What is the record high for the Dow Jones?
The Dow Jones’ close on Wednesday topped its previous record of 36,799.65 from January 2022.
What does this mean for me and my 401(k)?
The rally offers a boost to investors’ retirement plans. It’s also a good signal for the overall economy’s health, according to Ryan Detrickchief market strategist at financial services firm Carson Group.
“It’s important for investors to remember stocks tend to lead the economy. That’s on the way up and the way down,” he said. “But right now, with new highs taking place? It could be the market’s way of saying, ‘Hey, there’s no recession next year, and the economy could be a little bit better than what most people are anticipating right now.’”
What’s next for the stock market?
Signs point to this bull market continuing in the near term.
“The end of the year is like a tractor beam, to use a Star Trek analogy,” Stovall said. “It’s basically pulling the indexes higher, because the portfolio managers are putting the pedal to the metal, realizing that they want to at least come as close to the benchmark if not exceed it, before year-end.”
Federal Reserve updates:Fed holds rates steady as inflation eases, forecasts 3 cuts in 2024
Detrick also expects more gains heading into the new year.
“The economy is on firm footing,” he said. “This Fed is done with their aggressive hiking. We could have record earnings next year,” for companies. “All of these things suggest that this bull market … could have legs well into 2024.”
Contributing: The Associated Press
