S&P 500 and Gold Hit All-Time Highs, Small Caps Rise After Fed Cuts Rates for First Time in 4 Years (UPDATED)
Editor’s note: This story has been updated with additional information.
On Wednesday afternoon, markets rallied following the US Federal Reserve’s decision to cut interest rates by 0.5 percent, marking the start of the central bank’s highly anticipated rate-cutting cycle.
What you should know: Wednesday’s 0.5% rate cut brings the Fed’s target rate to a new range of 4.75% to 5%, down from a 23-year high of 5.25% to 5.5%. It is also the first rate cut since March 2020.
The key interest rate has been in a range between 5.25% and 5.5% since the central bank last raised interest rates in July 2023.
The SPDR-S&P 500 (NYSE:SPY), which tracks the S&P 500 Index, rose 0.44% to an all-time high at last check, led by a number of names such as Arm Holdings Plc (NASDAQ:ARM), The Trade Desk Inc (NASDAQ:TTD) Toyota Motor Corp (NYSE:TM), General Motors Co (NYSE:GM) and Marriott International (NASDAQ:MAR).
The materials sector, observed by the SPDR Selected Materials Sector Fund (NYSE:XLB) showed the most strength at the time of writing, rising about 0.6% following the Fed decision. The energy sector, followed by the energy Select Sector SPDR Fund (NYSE:XLE) was the weakest, down 0.3% following the rate cut. Energy stocks had performed well on Wednesday ahead of the Fed decision, which may partly explain the relative weakness in afternoon trading.
Here’s a look at how various ETFs tracking the price-weighted Dow Jones Industrial Average, technology stocks, small caps, Treasuries and gold are performing following the Fed’s latest move.
It is also worth noting that crypto markets are volatile following the Fed’s interest rate decision. Bitcoin (CRYPTO: BTC) lost 0.86% in 24 hours to trade at $60,480, but was far from its daily low. ether (CRYPTO: ETH) was down 1.79% at $2,322.
Check this out: The US Federal Reserve cuts the key interest rate sharply by 0.5% and signals further easing measures
The increased volatility is likely the result of uncertainty ahead of the meeting. According to the CME’s FedWatch tool, the market was assuming a 61 percent probability of a larger rate cut of 0.5 percent before the meeting, while the probability of a smaller cut of 0.25 percent was 39 percent.
As Benzinga reports, the updated quarterly dot plot, which helps signal the Fed’s future policy intentions, points to a more aggressive rate-cutting path than forecast after the 0.5% cut earlier Wednesday. The median forecast now calls for rate cuts totaling 1% in 2024.
SPY Price Promotion: At the time of publication, the SPDR S&P 500 was up 0.44% and trading at $565.62, according to Benzinga Pro.
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Watch the Fed Chairman Jerome PowellYou can find the press conference here:
This illustration was created using artificial intelligence via Midjourney.
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This article S&P 500, Gold Hit All-Time Highs, Small Caps Rebound After Fed Cuts Rates for First Time in 4 Years (UPDATED) originally appeared on Benzinga.com
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