On the New York Stock Exchange, the Dow Jones star index ended at a record level on Wednesday. Investors responded enthusiastically to the interest rate decision of the Federal Reserve, the American central bank. The Dow Jones closed 1.4 percent higher at 37,090.24 points. The Nasdaq technology index and the S&P 500 also closed 1.4 percent higher, reaching their highest level in almost two years.
The central bank’s explanation and forecasts showed that interest rates will probably fall faster next year than previously expected, which led to significant price gains for shares and bonds.
Fed leaders expected an average 0.75 percentage point lower interest rate at their most recent meeting, which is a sharper decline than they thought in September. Chairman Jerome Powell warned in a press conference that inflation is still too high and an interest rate increase, if necessary, is still a possibility.
Surprise
Market strategist David Russell of online broker TradeStation calls Powell’s attitude a surprise. According to him, the tone of the central bank president was much less strict than after previous meetings, he told Bloomberg news agency.
Charlie Ripley of Allianz Investment Management also speaks of a milder tone from Powell. “The narrative within the investment community has shifted from estimating when the Fed will last raise rates to estimating when the first cut will occur.”
Government bonds also rose in value, which means that the return on them is falling. The dollar has clearly lost ground now that lower borrowing costs are in sight. The euro rose about 0.9 percent against the American currency and was worth 1.0884 dollars.
There were also takeover rumors on Wall Street. US Steel ended more than 6 percent higher after business channel CNBC reported that the company has received several takeover bids.
Pfizer loses 7 percent
Pharmaceutical company Pfizer lost almost 7 percent of its stock market value. Forecasts for profit and turnover for 2024 were disappointing. Declining sales of Pfizer’s corona vaccine continue to bother the company.
A reorganization announced by online marketplace Etsy met with little enthusiasm from investors. The company will cut more than two hundred jobs to reduce costs, which should improve profit margins. The stock ended 2.2 percent lower.
Oil prices rose slightly. A barrel of American oil was 1.8 percent more expensive at $69.81. Brent oil rose 1.9 percent in price to $74.60 per barrel.
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