The Dow Jones Industrial Average hit a new record high in trading Wednesday with investor fears of inflation and related interest rate hikes fading.
At the closing bell at 4 p.m. on Dec. 13, the Dow Jones ended the day at 37,090.94, up more than 500 points from the previous day’s trading. Both the Nasdaq and the S&P 500 indices also saw solid trading Dec. 13, with each closing up by 1.4%.
The surge came after the Federal Reserve declined to hike interest rates for the third straight month, and signaled that it would seek to cut the rates in 2024. The Fed had increased interest rates over the last year as part of an effort to help curb inflation and prevent an economic recession.
The rate cuts would help ease pressure on the economy, making it more affordable for people and businesses to obtain loans and credit.
The Fed held its main interest rate steady at a range of 5.25% to 5.50%, as was widely expected. In its statement Wednesday, the Fed hinted that its rate-hiking efforts may be over, saying it is considering whether “any additional” hikes are needed. Ahead of this latest policy meeting, traders had built up expectations that the Fed could even begin cutting interest rates in the first half of 2024.
Wall Street wants cuts to rates and has already pushed up prices in anticipation of them because they can act like steroids for financial markets and help relax pressure on the economy and the financial system. Earlier this year, high interest rates helped lead to several high-profile collapses in the U.S. banking system.
In the bond market, the yield on the 10-year Treasury tumbled to 4.03% from 4.21% late Tuesday. The two-year yield, which moves more on expectations for the Fed, dropped to 4.45% from 4.73%.
The last Dow Jones record high was set nearly two years ago, on Jan. 5, 2022, when the New York Stock Exchange closed for the day about 8 points shy of the 37,000 mark.