Traders react as Federal Reserve Chair Jerome Powell is seen delivering remarks on a screen, on the floor of the New York Stock Exchange (NYSE) in New York City, March 22, 2023.
Brendan McDermid | Reuters
The Dow Jones industrial Average jumped more than 200 points and was on pace for a record close Wednesday as the Federal Reserve signaled it would cut rates by more than previously forecast.
The 30-stock Dow added 232 points, or 0.6%, to 36,810, which would surpass its previous record close in January of 2022.The S&P 500 jumped 0.6% with bank and real estate shares leading the way, while the Nasdaq Composite climbed 0.5%.
The central bank held the benchmark overnight borrowing rate steady in the 5.25% to 5.5% range as expected, but more importantly it forecast three rate cuts in 2024, which was more than it had previously indicated.
The Fed’s meeting statement acknowledged that inflation “has eased” over the past year and the central bank formally lowered its inflation forecast for 2024, seeing a 2.4% rate down from 2.6%.
“I’d say we’ve seen a pivot as they acknowledged inflation is falling,” said Gina Bolvin, president of Bolvin Wealth Management Group. “It appears that the Fed is moving in the markets direction, rather than the market moving towards the Fed. The Santa Claus rally may continue.”
Investors await Fed Chair Jerome Powell’s commentary for clues into how soon rate cuts can be expected at 2:30 p.m. EST.
Wall Street also assessed fresh inflation data. The producer price index was unchanged in November after decreasing 0.4% in October, the U.S. Bureau of Labor Statistics said. Economists polled by Dow Jones forecast a rise of 0.1%.
Shares of Pfizer pulled back more than 8%, touching a 10-year low, after the company issued profit and revenue forecasts that were below Wall Street estimates. Tesla stock slipped 1.4% following a recall of 2 million vehicles over regulator concerns tied to its Autopilot system.
Investors are coming off a fourth straight positive session. Both the Dow and S&P 500 hit their highest intraday levels since January 2022. The Nasdaq Composite reached its highest level since April 2022.