Stocks rose Wednesday afternoon, with the S&P 500 setting a new closing record, after the Federal Reserve announced another cut in interest rates, while signaling that the economy appears to be strong enough to not need further cuts in the near future.
Investors were also monitoring a flood of quarterly corporate results that have largely come in better than analysts feared.
What did the major indexes do?
The S&P 500 index SPX, +0.33% rose 9.88 points, or 0.3%, to close at a record level of 3,046.77.
The Dow Jones Industrial Average DJIA, +0.43% gained 115.27 points, or 0.4%, to close at 27,186.69, and the Nasdaq Composite index COMP, +0.33% added 27.12 points, or 0.3% to 8,303.98.
The Dow sits about 0.6% from its record high of 27,359.16 set on July 15, while the Nasdaq remains 0.3% below its record of 8,330.21, set on July 26.
What drove the market?
The Federal Reserve cut its benchmark fed funds rate by 0.25% to between 1.50% and 1.75%, a move that was widely expected by futures markets.
The central bank said in a statement accompanying the decision that the U.S. “labor market remains strong and that economic activity has been rising at a moderate rate,” adding that “sustained expansion of economic activity, strong labor-market conditions, and inflation near the committee’s symmetric 2% objective are the most likely outcomes” in the quarters ahead.
It justified the easier monetary policy by noting that inflation remains below the Fed’s 2% target, “while business investment and exports remain weak.”
The statement may reflect a central bank that will be less willing to cut interest rates in the coming quarters, after it removed the phrase that the Fed “will act as appropriate to sustain the economic expansion” and replaced it with less forceful language suggesting a wait-and-see approach.