- Dow Jones climbs into fresh record bid after Fed delivers 50 bps rate cut.
- FOMC dot plot shifts lower as policymakers absorb additional rate cut expectations.
- Markets pivot to face down Fed Chair Powell press conference.
The Dow Jones Industrial Average (DJIA) soared into an all-time high just shy of 42,000 on Wednesday after the Federal Reserve (Fed) finally broke its wait-and-see stance, kicking open the doors on its first rate cut in over four years with a 50 bps trim to the Fed Funds rate.
The Fed’s dot plot of the Federal Open Market Committee’s (FOMC) Summary of Economic Projections was also revised downward from the central bank’s previous rate outlook. The median policy expectations from the Fed now see the Fed Funds rate at 4.4% by year-end 2024 and 3.4% by year-end 2025, down from 5.1% and 4.1%, respectively.
Read the latest: Jerome Powell speaks on policy outlook after cutting interest rate by 50 bps
Going deeper into the Fed’s notes, Fed policymakers now see US Gross Domestic Product (GDP) growth of 2.0% flat through 2024, down from the previous print of 2.1% in June. Fed officials also expected the US Unemployment Rate to settle around 4.4% by the end of 2024.
With the Fed finally catching up to market expectations that have been clamoring for rate cuts since the beginning of the year, global markets are pivoting to catch Fed Chair Jerome Powell’s press conference due at the bottom of the hour.
Dow Jones news
Despite an initial kick into a new all-time high, the Dow Jones is still trading on the tepid side on Wednesday, churning just south of the 41,800 mark as investors await an appearance from Fed Chair Jerome Powell. Around two-thirds of the major equity index is in the green post-Fed, with gains being led by Apple (AAPL) which is up over 2% on the day and testing $221.50 per share.
Elsewhere, Honeywell (HON) is attempting to recover an off-kilter stance on Wednesday, rallying 1% after kicking the day off off-balance despite a recent announcement of a partnership with Samsung to produce carbon capture devices on a larger scale.
More to come…
Dow Jones 5-minute chart
Economic Indicator
Fed Interest Rate Decision
The Federal Reserve (Fed) deliberates on monetary policy and makes a decision on interest rates at eight pre-scheduled meetings per year. It has two mandates: to keep inflation at 2%, and to maintain full employment. Its main tool for achieving this is by setting interest rates – both at which it lends to banks and banks lend to each other. If it decides to hike rates, the US Dollar (USD) tends to strengthen as it attracts more foreign capital inflows. If it cuts rates, it tends to weaken the USD as capital drains out to countries offering higher returns. If rates are left unchanged, attention turns to the tone of the Federal Open Market Committee (FOMC) statement, and whether it is hawkish (expectant of higher future interest rates), or dovish (expectant of lower future rates).
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Last release: Wed Sep 18, 2024 18:00
Frequency: Irregular
Actual: 5%
Consensus: 5.25%
Previous: 5.5%
Source: Federal Reserve
