UNITED STATES NEWS

Stock market today: Wall Street rallies to records as Federal Reserve still sees rate cuts for 2024

Mar 20, 2024, 12:11 AM | Updated: 1:26 pm

NEW YORK (AP) — U.S. stocks rallied to records Wednesday after the Federal Reserve indicated it’s likely to deliver the cuts to interest rates this year that Wall Street craves, despite some discouragingly high inflation reports.

The S&P 500 jumped 46.11 points, or 0.9%, to 5,224.62 and set an all-time high for a second straight day. It’s already run up 9.5% so far in this young year, which is a bit better than the average for a full year over the last two decades.

The Dow Jones Industrial Average jumped 401.37, or 1%, to 39,512.13, and the Nasdaq composite roared 202.62 points higher, or 1.3%, to 16,369.41. Both also hit records.

Some of Wall Street’s nervousness coming into the day washed away after the Fed released a survey of its policy makers, which showed the median still expects the central bank to deliver three cuts to interest rates in 2024. That’s the same number as they had penciled in three months earlier, and expectations for the relief that such cuts would provide are a big reason U.S. stock prices have set records.

The fear on Wall Street was that the Fed may trim the number of forecasted cuts because of a string of recent reports that showed inflation remaining hotter than expected. The Fed has been keeping its main interest rate at its highest level since 2001 to grind down inflation. High rates slow the overall economy by making borrowing more expensive and by hurting prices for investments.

Fed Chair Jerome Powell said he noticed the last two months’ worse-than-expected reports, but they “haven’t really changed the overall story, which is that of inflation moving down gradually on a sometimes bumpy road towards 2%. That story hasn’t changed.”

Powell said again that the Fed’s next move is likely to be a cut sometime this year, but that it needs more confirmation inflation is moving toward its target of 2%.

The Fed has dangerously little room for error. Cutting rates too early risks allowing inflation to reaccelerate, but cutting too late could lead to widespread job losses and recession.

“I don’t think we really know whether this is a bump on the road or something more; we’ll have to find out,” Powell said about January and February’s inflation data. “In the meantime, the economy is strong, the labor market is strong, inflation has come way down, and that gives us the ability to approach this question carefully.”

Fed officials upgraded their forecasts for the U.S. economy’s growth this year, while also indicating they may end up keeping its main interest rate higher in 2025 and 2026 than earlier thought.

“They probably figure they don’t need to cause a recession to tame inflation, and that’s a good thing,” said Brian Jacobsen, chief economist at Annex Wealth Management.

In the bond market, Treasury yields had a mixed reaction.

The two-year Treasury yield, which closely tracks expectations for Fed action, initially jumped before quickly giving up the gain. It eventually fell back to 4.61%, down from 4.69% late Tuesday, as traders built bets for the Federal Reserve to begin cutting rates in June.

Traders had already given up on earlier hopes for the Fed to begin cutting in March. The worry is that if the Fed waits too long into the summer before lowering rates, it may not end up doing so all year. That’s because of the risk of appearing political if it were to make big changes to policies just ahead of U.S. elections set for November.

The yield on the 10-year Treasury, which also takes into account longer-term economic growth and inflation, initially tumbled after the Fed’s announcement but then swiveled. It was later sitting at 4.28%, down from 4.30% late Tuesday.

On Wall Street, Mexican food chain Chipotle rose 3.5% after announcing its first stock split in history, a move that would lower the price of each share and make it accessible for more investors.

In stock markets abroad, indexes Europe and Asia were mixed. Japan’s market was closed for a holiday a day after the Bank of Japan hiked its benchmark interest rate for the first time in 17 years, raising the rate to a range of zero to 0.1% from minus 0.1%.

The FTSE 100 in London was virtually flat after British inflation in February came in below expectations at 3.4%, marking its lowest level since September 2021. That supports hope for rate cuts in coming months.

___________

Zimo Zhong contributed to this report.

United States News

FILE - Balloons are hoisted to the ceiling in the Forum ahead of the 2024 Republican National Conve...

Associated Press

When does a presumptive nominee become a nominee? Here’s how Donald Trump will make it official

WASHINGTON (AP) — Monday 12:01 AM Nearly 2,500 delegates are gathering in Milwaukee this week for a roll call vote to select a the Republican presidential nominee, formally ending the presidential primary. It will be a moment lacking in suspense: Former President Donald Trump has already been the presumptive nominee for months, having clinched a […]

8 minutes ago

FILE - Actor Clint Eastwood speaks to an empty chair while addressing delegates during the Republic...

Associated Press

Floor fights, boos and a too-long kiss. How the dramatic and the bizarre define convention history

WASHINGTON (AP) — In 1948, the Republican and Democratic parties did something unthinkable in today’s climate of ferocious political animosity: They not only held their national conventions in the same city, but shared some of the props. Both gathered in Philadelphia, largely because its Municipal Auditorium had already been fitted with the wiring needed for […]

12 minutes ago

FILE - Republican presidential candidate former President Donald Trump speaks at a campaign rally, ...

Associated Press

The RNC’s first day will still focus on the economy. Here’s what to know about Trump’s plans

WASHINGTON (AP) — Donald Trump goes into the Republican National Convention with bold promises about the U.S. economy, but he has sketched out notably few details about how his plans would actually work. The convention’s first day is still expected to focus on the economy even after Saturday’s shooting at a Trump rally in Pennsylvania […]

13 minutes ago

FILE - Wayne LaPierre arrives at court, Jan. 24, 2024, in New York. The second phase of the civil t...

Associated Press

Second phase of NRA civil trial over nonprofit’s spending set to open in NYC

NEW YORK (AP) — The second phase of the civil trial against the National Rifle Association and its top executives is set to begin Monday in Manhattan, with New York Attorney General Letitia James seeking an independent monitor to oversee the powerful gun rights group. The Democrat also is seeking to ban Wayne LaPierre, the […]

20 minutes ago

Associated Press

Stock market today: Asian shares are mixed as China reports its economy grew 4.7% in last quarter

Asian shares began the week trading mixed as China reported that its economy expanded at a slower-than-forecast 4.7% annual pace in the last quarter. Markets seemed to take in stride a shooting at a rally for former President Donald Trumpin Butler, Pennsylvania that is being investigated as an attempted assassination of the presumptive Republican nominee. […]

22 minutes ago

FILE - Chickens stand in their cages at a farm, in Iowa, Nov. 16, 2009. Four more people, all Color...

Associated Press

US health officials confirm four new bird flu cases, in Colorado poultry workers

Four poultry workers in Colorado have been diagnosed with bird flu, health officials confirmed Sunday. The new cases bring the U.S. total to nine since the first human case of the current outbreak was detected in 2022, also in a Colorado poultry worker. Eight of the nine were reported this year. Their illnesses were relatively […]

36 minutes ago

Sponsored Articles

...

Sanderson Ford

3 new rides for 3 new road trips in Arizona

It's time for the Sanderson Ford Memorial Day sale with the Mighty Fine 69 Anniversary, as Sanderson Ford turned 69 years old in May.

...

Collins Comfort Masters

Here’s how to be worry-free when your A/C goes out in the middle of summer

PHOENIX -- As Arizona approaches another hot summer, Phoenix residents are likely to spend more time indoors.

...

DESERT INSTITUTE FOR SPINE CARE

Desert Institute for Spine Care is the place for weekend warriors to fix their back pain

Spring has sprung and nothing is better than March in Arizona. The temperatures are perfect and with the beautiful weather, Arizona has become a hotbed for hikers, runners, golfers, pickleball players and all types of weekend warriors.

Stock market today: Wall Street rallies to records as Federal Reserve still sees rate cuts for 2024