Interest rate outlook boosts Dow
The Fed could cut the key interest rate next year. A reason for stock market players to rejoice. And the extent to which this prospect is inspiring investors is particularly evident in the best-known Wall Street index. But other indices are also making leaps and bounds.
The prospect of a significant fall in key interest rates has driven the Dow Jones Industrial to a record high. The best-known Wall Street index also broke through the 37,000-point barrier for the first time and ultimately ended the day up 1.40 percent at 37,090.24 points. Since its rally after the interim low at the end of October, the Dow has now gained just over 14%. Since the beginning of the year, it has gained just under 12 percent.
The broad market S&P 500 gained 1.37 percent to 4707.09 points. The technology-heavy Nasdaq 100 rose by 1.27 percent to 16,562.37 points. These two indices have also risen sharply in the course of the current stock market rally and are now just below their highs.
As expected, the US Federal Reserve left key interest rates unchanged in a range of 5.25% to 5.50%. For 2024, however, the monetary authorities in Washington are expecting more and more significant interest rate cuts than before. They are now assuming an average key interest rate of 4.6 percent. In September, they were still assuming an average of 5.1 percent. This now points to around three interest rate cuts in 2024 with a total volume of 0.75 percentage points.
"The Fed is seen as a fairly conservative institution that weighs up the implications of what it says very carefully," said chief economist James Knightley from ING, calling the Fed signals a "surprising change in outlook".
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The potential interest rate cuts by the Fed in 2024 has sparked optimism on Wall Street, as evidenced by the Dow Jones Industrial's surge beyond the 37,000-point barrier. This shift in outlook from the Fed could significantly impact the key interest rate, possibly leading to decreases along the lines discussed by economists.
Source: www.ntv.de
