Dow rises 400 points to record close after Fed says 3 rate cuts are on the way: Live updates

The three major averages rallied to hit all-time closing records Wednesday after the Federal Reserve held rates at a 23-year high and maintained expectations for three cuts before the end of 2024.

The Dow Jones Industrial Average rallied 401.37 points, or 1.03%, to finish at 39,512.13, while the S&P 500 gained 0.89% to close at 5,224.62 and punched above the 5,200 level for the first time ever. The Nasdaq Composite jumped 1.25% to settle at 16,369.41.

The Fed left rates unchanged but said that it plans to cut three times before the end of the year, reaffirming its previous forecast from December. That said, the central bank indicated that it needs greater evidence that inflation is easing before it starts taking its foot off the brakes. 

“The Committee does not expect it will be appropriate to reduce the target range until it has gained greater confidence that inflation is moving sustainably toward 2 percent,” the central bank said.

Prior to the meeting, some investors had feared that a recent spate of hot inflation reports would potentially result in even fewer cuts than markets anticipated.

“We had some inflation bumps this year but Jerome Powell’s not blinking,” said David Russell, global head of market strategy at TradeStation. “Investors are relieved to see three cuts stay in the dot plot, supporting markets and risk appetite. The Fed might wake up with a hangover, but the punchbowl isn’t going away yet.”

Financial stocks were higher after the Fed decision on the hope that rate cuts this year will keep the economy growing. American Express added 2.8%, while the SPDR S&P Regional Banking ETF gained more than 3%.

Megacap technology stocks responsible for powering the recent market rally rose as investors bet the sector stands to gain the most from lower rates. Alphabet, Amazon, Microsoft and Nvidia rose about 1%, while Meta Platforms gained 1.9%. Recent market laggards Apple and Tesla advanced 1.5% and 2.5%, respectively.

Chipotle Mexican Grill advanced 3.5% after declaring a stock split postmarket Tuesday. Paramount Global skyrocketed 11.8% following a report that Apollo Global Management offered $11 billion for its film and TV studio.