The Federal Reserve's third rate cut, New York stock market hits a new high—S&P 500 reaches a record high, Dow jumps nearly 500 points

Source: BlockMedia Original Title: [New York Stock Market Close] Confidence in No Tightening Sparks New York Stocks… S&P Hits Record High, Dow Jumps 500 Points Original Link:

US Federal Reserve Rate Cut Promotes Full Rally in New York Stock Market

The U.S. Federal Reserve(Fed) completed its third rate cut of the year, leading to a full rally in major U.S. stock indices. Among them, the S&P 500 hit a record high, the Dow Jones rose nearly 500 points, reflecting market optimism.

According to data from the New York Stock Exchange(NYSE), the Dow Jones Industrial Average(DJIA) rose 497.46 points(1.05%), closing at 48,057.75. The S&P 500 increased 46.17 points(0.67%), closing at 6,886.68, a new record high. The technology-heavy Nasdaq rose 77.669 points(0.33%), closing at 23,654.155.

Federal Reserve Signals Easing Policy

The main driver of this stock market rally was the reaffirmation of the Fed’s easing policy stance. After a two-day Federal Open Market Committee(FOMC) meeting, the Fed cut the benchmark interest rate by 0.25 percentage points, bringing it to an annual rate of 3.50%-3.75%. This is the third rate cut this year, with markets expecting further rate cuts next year.

Federal Reserve Chairman Jerome Powell stated at the press conference, “We need to continue observing future developments,” but effectively ruled out the possibility of rate hikes. He explicitly pointed out: “At this point, rate hikes are no longer part of anyone’s baseline scenario.” Therefore, markets broadly expect the Fed’s next move to be further rate cuts rather than hikes.

Balance Sheet Expansion Boosts Market

The Fed mentioned in its statement that it will restart the $40 billion short-term Treasury bond purchase program, hinting at an expansion of its balance sheet, which positively impacted the markets. Meanwhile, the Fed removed the phrase “keeping it low” when assessing the labor market, indicating a shift from inflation control to economic growth stimulation.

Sector Divergence Evident, Small/Mid-cap and Bank Stocks Strengthen

The Fed’s easing signals stimulated overall market buying, with investor anticipation for the “Christmas rally” at year’s end rising.

In terms of individual stocks, many companies hit all-time highs. Ten S&P 500 constituents, including General Motors, TJX, Ross Stores, Citizens Financial, U.S. National Financial Services, and Synchrony Financial, reached historic highs, with General Motors reaching its highest point since its 2010 IPO.

The Russell 2000 Index, composed of small and mid-cap stocks, also maintained strength. It increased about 1.5% in the afternoon, nearing its historical high, with a year-to-date increase of 14.9%. Investors are buying up sectors benefiting from lower financing costs.

Looking at sectors, regional bank stocks performed the best. The regional bank ETF(KRE) surged 3.4%, with large regional banks such as True Bank, M&T Bank, Huntington Bancshares, and Citizens Financial also rising. This reflects market expectations that low benchmark rates will lead to lending expansion and improved profitability.

Expert Opinions

While the market previously worried that the Fed’s actions might fall short of expectations, some experts interpret the expansion of the balance sheet and the dot plot optimistically. Jose Torres, Chief Economist at Interactive Brokers, said, “Just the fact that the balance sheet is expanding again is enough for the market to react positively. The upward revision of economic growth, downward revision of inflation, and neutral employment outlook in the dot plot are all positive factors.”

Market Expectations

According to CME FedWatch data, there is a 75.6% chance that the Federal Open Market Committee will hold interest rates steady in January next year, and a 93.7% probability of at least two rate cuts.